----

----

| ý |   | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     |
|--------|--------|---------------------------------------------------------------|
|   |   | SECURITIES      EXCHANGE ACT OF 1934                          |
|   |   | For      the fiscal year ended December 31, 2007              |
|   |   | OR                                                            |
| o      |   | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|   |   | SECURITIES      EXCHANGE ACT OF 1934                          |

| Florida                                            |   | 0-13358                       |   | 59-2273542                             |
|----------------------------------------------------|--------|-------------------------------|--------|----------------------------------------|
| (State      of Incorporation)                      |   | (Commission      File Number) |   | (IRS      Employer Identification No.) |
| 217      North Monroe Street, Tallahassee, Florida |   |  32301                   |
| (Address      of principal executive offices)      |   | (Zip      Code)               |

| Class                                        |   | Outstanding      at February 29, 2008 |
|----------------------------------------------|--------|---------------------------------------|
| Common      Stock, $0.01 par value per share |   |  17,169,096      shares          |
|                                         |   |                                  |

----

TABLE

| PART      I              |   |                                                                                                                             |   | PAGE   |
|--------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                     |   |                                                                                                                             |   |   |
| Item      1.             |   | Business                                                                                                                         |   | 4      |
| Item      1A.            |   | Risk Factors                                                                                                                     |   | 14     |
| Item      1B.            |   | Unresolved Staff Comments                                                                                                        |   | 20     |
| Item      2.             |   | Properties                                                                                                                       |   | 20     |
| Item      3.             |   | Legal Proceedings                                                                                                                |   | 20     |
| Item      4.             |   | Submission of Matters to a Vote of Security      Holders                                                                         |   | 20     |
|                     |   |                                                                                                                             |   |   |
| PART      II             |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
|  Item      5.  |   | Market for the Registrant’s Common Equity, Related      Shareowner Matters, and Issuer Purchases of Equity      Securities |   | 20     |
| Item      6.             |   | Selected Financial Data                                                                                                          |   | 22     |
| Item      7.             |   | Management's Discussion and Analysis of Financial Condition      and Results of Operations                                       |   | 23     |
| Item      7A.            |   | Quantitative and Qualitative Disclosure About Market      Risk                                                                   |   | 50     |
| Item      8.             |   | Financial Statements and Supplementary      Data                                                                                 |   | 53     |
| Item      9.             |   | Changes in and Disagreements with Accountants on Accounting      and Financial Disclosure                                        |   | 89     |
| Item      9A.            |   | Controls and Procedures                                                                                                          |   | 89     |
| Item      9B.            |   | Other Information                                                                                                                |   | 91     |
|                     |   |                                                                                                                             |   |   |
| PART      III            |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
| Item      10.            |   | Directors, Executive Officers, and Corporate      Governance                                                                     |   | 91     |
| Item      11.            |   | Executive Compensation                                                                                                           |   | 91     |
| Item      12.            |   | Security Ownership of Certain Beneficial Owners and      Management and Related Shareowner Matters                               |   | 91     |
| Item      13.            |   | Certain Relationships and Related Transactions, and      Director Independence                                                   |   | 92     |
| Item      14.            |   | Principal Accountant Fees and      Services                                                                                      |   | 92     |
|                     |   |                                                                                                                             |   |   |
| PART      IV             |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
| Item      15.            |   | Exhibits and Financial Statement      Schedules                                                                                  |   | 93     |
| Signatures               |   | 95                                                                                                                               |

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| §   | the      frequency and magnitude of foreclosure of our  loans; |
|--------------------|----------------------------------------------------------------|

| §   | the      effects of our lack of a diversified loan portfolio, including the risks      of geographic and industryconcentrations; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| §   | the      accuracy of our financial statement estimates and assumptions, including      the estimate for our loan lossprovision; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| §   | our      ability to integrate the business and operations of companies and banks      that we have acquired, and those we may acquire in the    future; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | our      need and our ability to incur additional debt or equity      financing; |
|--------------------|----------------------------------------------------------------------------------|

| §   | the      strength of the United States economy in general and the strength of the      local economies in which we conductoperations; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| §   | the      effects of harsh weather conditions, including  hurricanes; |
|--------------------|----------------------------------------------------------------------|

| §   | inflation,      interest rate, market and monetaryfluctuations; |
|--------------------|-----------------------------------------------------------------|

| §   | effect      of changes in the stock market and other capital  markets; |
|--------------------|------------------------------------------------------------------------|

| §   | legislative      or regulatory changes; |
|--------------------|-----------------------------------------|

| §   | our      ability to comply with the extensive laws and regulations to which we are      subject; |
|--------------------|--------------------------------------------------------------------------------------------------|

| §   | the      willingness of clients to accept third-party products and services rather      than our products and services and viceversa; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| §   | changes      in the securities and real estatemarkets; |
|--------------------|--------------------------------------------------------|

| §   | increased      competition and its effect onpricing; |
|--------------------|------------------------------------------------------|

| §   | technological      changes; |
|--------------------|-----------------------------|

| §   | changes      in monetary and fiscal policies of the U.S.  Government; |
|--------------------|-----------------------------------------------------------------------|

| §   | the      effects of security breaches and computer viruses that may affect our      computer systems; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| §   | changes      in consumer spending and savinghabits; |
|--------------------|-----------------------------------------------------|

| §   | growth      and profitability of our noninterestincome; |
|--------------------|---------------------------------------------------------|

| §   | changes      in accounting principles, policies, practices or    guidelines; |
|--------------------|------------------------------------------------------------------------------|

| §   | the      limited trading activity of our commonstock; |
|--------------------|-------------------------------------------------------|

| §   | the      concentration of ownership of our commonstock; |
|--------------------|---------------------------------------------------------|

| §   | anti-takeover      provisions under federal and state law as well as our Articles of      Incorporation and our Bylaws; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| §   | other      risks described from time to time in our filings with the Securities and      Exchange Commission; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| §   | our      ability to manage the risks involved in the  foregoing. |
|--------------------|------------------------------------------------------------------|

----

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|  Item 1.  Business |   |
|-----------------------------------|--------|

| §   | Business Banking – The      Bank provides banking services to corporations and other business      clients.  Credit products are available for a wide variety of      general business purposes, including financing for commercial business      properties, equipment, inventories and accounts receivable, as well as      commercial leasing and letters of credit.  Treasury management      services and merchant credit card transaction processing services are also      offered. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Commercial Real Estate Lending      – The Bank provides a wide range of products to meet the financing      needs of commercial developers and investors, residential builders and      developers, and communitydevelopment. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Residential Real Estate      Lending – The Bank provides products to help meet the home      financing needs of consumers, including conventional permanent and      construction/permanent (fixed or adjustable rate) financing arrangements,      and FHA/VA loan products.  The bank offers both fixed-rate and      adjustable rate residential mortgage (ARM) loans.  As of      December 31, 2007, approximately 16% of the Bank’s loan portfolio      consisted of residential ARM loans.  A portion of our loans      originated are sold into the secondarymarket. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Bank offers these products through its existing network of branch      offices.  Geographical expansion of the delivery of this product      line has occurred over the past three years through the opening of      mortgage lending offices in Gainesville, Florida (Alachua County) and      Thomasville, Georgia (ThomasCounty). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Retail Credit – The      Bank provides a full range of loan products to meet the needs of      consumers, including personal loans, automobile loans, boat/RV loans, home      equity loans, and credit cardprograms. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| §   | Institutional Banking –The      Bank provides banking services to meet the needs of state and local      governments, public schools and colleges, charities, membership and      not-for-profit associations including customized checking and savings      accounts, cash management systems, tax-exempt loans, lines of credit, and      term loans. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Retail Banking - The      Bank provides a full range of consumer banking services, including      checking accounts, savings programs, automated teller machines (ATMs),      debit/credit cards, night deposit services, safe deposit facilities, and      PC/Internet banking.  Clients can use the Capital City Bank      Direct automated phone system to gain 24-hour access to their deposit and      loan account information, and transfer funds between linked      accounts.  The Bank is a member of the “Star” ATM Network that      permits banking clients to access cash at ATMs or point of sale      merchants. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                     |   | Market      Share as of June 30,(1) |   |
|--------------------------|--------|-------------------------------------|--------|
|                     |   | 2007                                |   | 2006 |   | 2005 |   |
| Florida                  |   |                                |   |   |   |   |   |
| Alachua      County(2)   |   |                                | 4.7    | % |   | 5.6 | %  |   | 6.3 | %  |
| Bradford      County     |   |                                | 47.6   | % |   | 44.6 | % |   | 42.6 | % |
| Citrus      County       |   |                                | 3.0    | % |   | 3.3 | % |   | 3.5 | % |
| Clay      County         |   |                                | 2.0    | % |   | 2.0 | % |   | 2.2 | % |
| Dixie      County        |   |                                | 22.9   | % |   | 20.8 | % |   | 17.3 | % |
| Gadsden      County      |   |                                | 61.0   | % |   | 64.9 | % |   | 68.0 | % |
| Gilchrist      County    |   |                                | 33.6   | % |   | 47.1 | % |   | 49.5 | % |
| Gulf      County         |   |                                | 11.7   | % |   | 14.3 | % |   | 19.8 | % |
| Hernando      County     |   |                                | 1.2    | % |   | 1.5 | % |   | 1.4 | % |
| Jefferson      County    |   |                                | 22.8   | % |   | 24.6 | % |   | 24.4 | % |
| Leon      County         |   |                                | 16.2   | % |   | 18.0 | % |   | 17.5 | % |
| Levy      County         |   |                                | 33.0   | % |   | 34.4 | % |   | 33.8 | % |
| Madison      County      |   |                                | 13.1   | % |   | 14.9 | % |   | 15.1 | % |
| Pasco      County        |   |                                | 0.2    | % |   | 0.2 | % |   | 0.3 | % |
| Putnam      County       |   |                                | 11.1   | % |   | 12.3 | % |   | 12.3 | % |
| St.      Johns County(2) |   |                                | 1.2    | % |   | 1.5 |  % |   | 2.0 |  % |
| Suwannee      County     |   |                                | 7.7    | % |   | 11.8 | % |   | 7.5 | % |
| Taylor      County       |   |                                | 30.1   | % |   | 28.6 | % |   | 27.9 | % |
| Wakulla      County(3)   |   |                                | 2.6    | % |   | 2.9 | % |   | -- |   |
| Washington      County   |   |                                | 13.8   | % |   | 17.4 | % |   | 20.3 | % |
| Georgia(4)               |   |                                |   |   |   |   |   |   |   |   |
| Bibb      County         |   |                                | 2.5    | % |   | 2.9 | % |   | 2.8 | % |
| Burke      County        |   |                                | 7.8    | % |   | 9.2 | % |   | 9.3 | % |
| Grady      County        |   |                                | 18.7   | % |   | 20.0 | % |   | 19.7 | % |
| Laurens      County      |   |                                | 19.2   | % |   | 23.8 | % |   | 33.1 | %  |
| Troup      County        |   |                                | 6.2    | % |   | 8.2 | % |   | 7.5 | % |
| Alabama                  |   |                                |   |   |   |   |   |   |   |   |
| Chambers      County     |   |                                | 6.5    | % |   | 4.7 | % |   | 3.9 | % |

| (1) | Obtained from the June 30, 2007      FDIC/OTS Summary of DepositsReport. |
|-----|--------------------------------------------------------------------------|

| (2) | CCB entered market in May      2005. |
|-----|--------------------------------------|

| (3) | CCB entered market in December      2005. |
|-----|-------------------------------------------|

| (4) | Does not include Thomas County      where Capital City Bank maintains a residential mortgage lending office      only. |
|-----|------------------------------------------------------------------------------------------------------------------------|

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| County         | Number      ofCommercial      Banks | Number      of CommercialBank      Offices |
|----------------|-------------------------------------|--------------------------------------------|
| Florida   |                                |                                       |
| Alachua        | 13                                  | 65                                         |
| Bradford       | 3                                   | 3                                          |
| Citrus         | 16                                  | 49                                         |
| Clay           | 12                                  | 29                                         |
| Dixie          | 3                                   | 4                                          |
| Gadsden        | 4                                   | 6                                          |
| Gilchrist      | 3                                   | 6                                          |
| Gulf           | 6                                   | 9                                          |
| Hernando       | 13                                  | 41                                         |
| Jefferson      | 2                                   | 2                                          |
| Leon           | 14                                  | 83                                         |
| Levy           | 3                                   | 13                                         |
| Madison        | 6                                   | 6                                          |
| Pasco          | 25                                  | 114                                        |
| Putnam         | 6                                   | 16                                         |
| St.      Johns | 22                                  | 63                                         |
| Suwannee       | 5                                   | 8                                          |
| Taylor         | 3                                   | 4                                          |
| Wakulla        | 4                                   | 9                                          |
| Washington     | 5                                   | 5                                          |
| Georgia   |                                |                                       |
| Bibb           | 11                                  | 55                                         |
| Burke          | 5                                   | 10                                         |
| Grady          | 5                                   | 8                                          |
| Laurens        | 10                                  | 19                                         |
| Troup          | 10                                  | 24                                         |
| Alabama   |                                |                                       |
| Chambers       | 5                                   | 10                                         |

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| Item      1A. | Risk    Factors |
|---------------|-----------------|

| §   | the      risk characteristics of various classifications of  loans; |
|--------------------|---------------------------------------------------------------------|

| §   | previous      loan loss experience; |
|--------------------|-------------------------------------|

| §   | specific      loans that have loss potential; |
|--------------------|-----------------------------------------------|

| §   | delinquency      trends; |
|--------------------|--------------------------|

| §   | estimated      fair market value of thecollateral; |
|--------------------|----------------------------------------------------|

| §   | current      economic conditions; and |
|--------------------|---------------------------------------|

| §   | geographic      and industry loan concentrations. |
|--------------------|---------------------------------------------------|

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| §   | Commercial Real Estate      Loans.  Repayment is dependent on income being generated      in amounts sufficient to cover operating expenses and debt      service.  These loans also involve greater risk because they are      generally not fully amortizing over a loan period, but rather have a      balloon payment due at maturity.  A borrower’s ability to make a      balloon payment typically will depend on being able to either refinance      the loan or timely sell the underlyingproperty. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Commercial      Loans.  Repayment is generally dependent upon the      successful operation of the borrower’s business.  In addition,      the collateral securing the loans may depreciate over time, be difficult      to appraise, be illiquid, or fluctuate in value based on the success of      the business. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Construction      Loans.  The risk of loss is largely dependent on our      initial estimate of whether the property’s value at completion equals or      exceeds the cost of property construction and the availability of take-out      financing.  During the construction phase, a number of factors can result in delays      or cost overruns.  If our estimate is inaccurate or if actual      construction costs exceed estimates, the value of the property securing      our loan may be insufficient to ensure full repayment when completed      through a permanent loan or by seizure of      collateral. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Consumer      Loans.  Consumer loans      (such as personal lines of credit) are collateralized, if at all, with      assets that may not provide an adequate source of payment of the loan due      to depreciation, damage, orloss. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| §   | general      or local economic conditions; |
|--------------------|--------------------------------------------|

| §   | neighborhood      values; |
|--------------------|---------------------------|

| §   | interest      rates; |
|--------------------|----------------------|

| §   | real      estate tax rates; |
|--------------------|-----------------------------|

| §   | operating      expenses of the mortgagedproperties; |
|--------------------|-----------------------------------------------------|

| §   | supply      of and demand for rental units orproperties; |
|--------------------|----------------------------------------------------------|

| §   | ability      to obtain and maintain adequate occupancy of the    properties; |
|--------------------|------------------------------------------------------------------------------|

| §   | zoning      laws; |
|--------------------|-------------------|

| §   | governmental      rules, regulations and fiscal policies;and |
|--------------------|--------------------------------------------------------------|

| §   | acts      of God. |
|--------------------|-------------------|

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| §   | Supermajority      voting requirements to remove a director from  office; |
|--------------------|---------------------------------------------------------------------------|

| §   | Provisions      regarding the timing and content of shareowner proposals and      nominations; |
|--------------------|------------------------------------------------------------------------------------------------|

| §   | Supermajority      voting requirements to amend Articles of Incorporation unless approval is      received by a majority of “disinterested  directors”; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Absence      of cumulative voting; and |
|--------------------|----------------------------------------|

| §   | Inability      for shareowners to take action by written  consent. |
|--------------------|--------------------------------------------------------------------|

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| Item 1B. | Unresolved      Staff Comments |
|----------|--------------------------------|

Item2.

| Item      3. | Legal      Proceedings |
|--------------|------------------------|

| Item      4. | Submission of Matters to a Vote      of Security Holders |
|--------------|----------------------------------------------------------|

| Item      5. | Market for the Registrant's      Common Equity, Related Shareowner Matters, and Issuer Purchases of Equity      Securities |
|--------------|----------------------------------------------------------------------------------------------------------------------------|

|                                   | 2007       |   | 2006      |   |
|----------------------------------------|------------|--------|-----------|--------|
|                                   | FourthQtr. |   | ThirdQtr. |   | SecondQtr. |   | FirstQtr. |   | FourthQtr. |   | ThirdQtr. |   | SecondQtr. |   | FirstQtr. |   |
| Common      stock price:               |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                   |       | $      | 34.00     |   |   | $ | 36.40 |   |   | $ | 33.69 |   |   | $ | 35.91 |   |   | $ | 35.98 |   |   | $ | 33.25 |   |   | $ | 35.39 |   |   | $ | 37.97 |   |
| Low                                    |       |   | 24.60     |   |   |   | 27.69 |   |   |   | 29.12 |   |   |   | 29.79 |   |   |   | 30.14 |   |   |   | 29.87 |   |   |   | 29.51 |   |   |   | 33.79 |   |
| Close                                  |       |   | 28.22     |   |   |   | 31.20 |   |   |   | 31.34 |   |   |   | 33.30 |   |   |   | 35.30 |   |   |   | 31.10 |   |   |   | 30.20 |   |   |   | 35.55 |   |
| Cash      dividends declared per share |       |   | .1850     |   |   |   | .1750 |   |   |   | .1750 |   |   |   | .1750 |   |   |   | .1750 |   |   |   | .1625 |   |   |   | .1625 |   |   |   | .1625 |   |

----

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| Period                                         | Total      numberof      sharespurchased |   | Averageprice      paidper      share |   | Total      number ofshares      purchased aspart      of our sharerepurchase program(1) |            | Maximum      Numberof      shares thatmay      yet be purchasedunder      our sharerepurchase      program |
|------------------------------------------------|------------------------------------------|--------|--------------------------------------|--------|-----------------------------------------------------------------------------------------|-----------------|------------------------------------------------------------------------------------------------------------|
|                                           |                                     |   |                                 |   |                                                                                    |            |                                                                                                       |   |   |
| October      1, 2007 toOctober      31, 2007   |  69,338                             |   |  $29.44                         |   |                                                                                    |  1,905,716 |                                                                                                       |   |  766,159 |
| November      1, 2007 toNovember      30, 2007 |  222,004                            |   |  26.86                          |   |                                                                                    |  2,119,720 |                                                                                                       |   |  552,155 |
| December      1, 2007 toDecember      31, 2007 |  164,481                            |   |  29.72                          |   |                                                                                    |  2,284,201 |                                                                                                       |   |  387,674 |
| Total                                          | 455,823                                  |   | $28.28                               |   |                                                                                    | 2,284,201       |                                                                                                       |   | 387,674 |

| (1) | This      balance represents the number of shares that were repurchased through the      Capital City Bank Group, Inc. Share Repurchase Program (the “Program”),      which was approved on March 30, 2000, and modified by our Board on January      24, 2002, March 22, 2007, and November 11, 2007 under which we were      authorized to repurchase up to 2,671,875 shares of our common      stock.  The Program is flexible and shares are acquired from the      public markets and other sources using free cash flow.  There is      no predetermined expiration date for the Program.  No shares are      repurchased outside of the Program.  In November 2007, 8,000      shares were purchased by an affiliated purchaser that was outside of the      Program. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |     |   | Period      Ending |   |     |   |
|------------------------------------|----------|--------|--------------------|--------|----------|--------|
| Index                              | 12/31/02 |   | 12/31/03           |   | 12/31/04 |   | 12/31/05 |   | 12/31/06 |   | 12/31/07 |   |
| Capital      City Bank Group, Inc. | $        | 100.00 |               | $      | 149.36   |   | $ | 138.15 |   | $ | 144.18 |   | $ | 151.39 |   | $ | 123.89 |   |
| NASDAQ      Composite              |     | 100.00 |               |   | 150.01   |   |   | 162.89 |   |   | 165.13 |   |   | 180.85 |   |   | 198.60 |   |
| SNL      $1B-$5B Bank Index        |     | 100.00 |               |   | 135.99   |   |   | 167.83 |   |   | 164.97 |   |   | 190.90 |   |   | 139.06 |   |

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| Item 6. Selected      Financial Data |   |
|-------------------------------------------|--------|

|                                                           |   | For      the Years Ended December 31, |       |
|----------------------------------------------------------------|--------|---------------------------------------|------------|
| (Dollars in Thousands, Except      Per Share Data)(1)      (3) |   | 2007                                  |       |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                           |   | $                                     | 165,323    |   |   | $ | 165,893 |   |   | $ | 140,053 |   |   | $ | 101,525 |   |   | $ | 94,830 |   |
| Net      Interest Income                                       |   |                                  | 112,241    |   |   |   | 119,136 |   |   |   | 109,990 |   |   |   | 86,084 |   |   |   | 79,991 |   |
| Provision      for Loan Losses                                 |   |                                  | 6,163      |   |   |   | 1,959 |   |   |   | 2,507 |   |   |   | 2,141 |   |   |   | 3,436 |   |
| Net      Income                                                |   |                                  | 29,683     |   |   |   | 33,265 |   |   |   | 30,281 |   |   |   | 29,371 |   |   |   | 25,193 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      Common Share:                                         |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      Net Income                                          |   | $                                     | 1.66       |   |   | $ | 1.79 |   |   | $ | 1.66 |   |   | $ | 1.74 |   |   | $ | 1.53 |   |
| Diluted      Net Income                                        |   |                                  | 1.66       |   |   |   | 1.79 |   |   |   | 1.66 |   |   |   | 1.74 |   |   |   | 1.52 |   |
| Cash      Dividends Declared                                   |   |                                  | .710       |   |   |   | .663 |   |   |   | .619 |   |   |   | .584 |   |   |   | .525 |   |
| Book      Value                                                |   |                                  | 17.03      |   |   |   | 17.01 |   |   |   | 16.39 |   |   |   | 14.51 |   |   |   | 15.27 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Key      Performance Ratios:                                   |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on Average Assets                                  |   |                                  | 1.18       | % |   |   | 1.29 | % |   |   | 1.22 | % |   |   | 1.46 | % |   |   | 1.40 | % |
| Return      on Average Equity                                  |   |                                  | 9.68       |   |   |   | 10.48 |   |   |   | 10.56 |   |   |   | 13.31 |   |   |   | 12.82 |   |
| Net      Interest Margin (FTE)                                 |   |                                  | 5.25       |   |   |   | 5.35 |   |   |   | 5.09 |   |   |   | 4.88 |   |   |   | 5.01 |   |
| Dividend      Pay-Out Ratio                                    |   |                                  | 42.77      |   |   |   | 37.01 |   |   |   | 37.35 |   |   |   | 33.62 |   |   |   | 34.51 |   |
| Equity      to Assets Ratio                                    |   |                                  | 11.19      |   |   |   | 12.15 |   |   |   | 11.65 |   |   |   | 10.86 |   |   |   | 10.98 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      Quality:                                            |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses                                 |   | $                                     | 18,066     |   |   | $ | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |   | $ | 12,429 |   |
| Allowance      for Loan Losses to Loans                        |   |                                  | 0.95       | % |   |   | 0.86 | % |   |   | 0.84 | % |   |   | 0.88 | % |   |   | 0.93 | % |
| Nonperforming      Assets                                      |   |                                  | 28,163     |   |   |   | 8,731 |   |   |   | 5,550 |   |   |   | 5,271 |   |   |   | 7,301 |   |
| Nonperforming      Assets to Loans + ORE                       |   |                                  | 1.47       |   |   |   | 0.44 |   |   |   | 0.27 |   |   |   | 0.29 |   |   |   | 0.54 |   |
| Allowance      to Nonperforming Loans                          |   |                                  | 71.92      |   |   |   | 214.09 |   |   |   | 331.11 |   |   |   | 345.18 |   |   |   | 529.80 |   |
| Net      Charge-Offs to Average Loans                          |   |                                  | 0.27       |   |   |   | 0.11 |   |   |   | 0.13 |   |   |   | 0.22 |   |   |   | 0.27 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Averages      for the Year:                                    |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net                                                |   | $                                     | 1,934,850  |   |   | $ | 2,029,397 |   |   | $ | 1,968,289 |   |   | $ | 1,538,744 |   |   | $ | 1,318,080 |   |
| Earning      Assets                                            |   |                                  | 2,183,528  |   |   |   | 2,258,277 |   |   |   | 2,187,672 |   |   |   | 1,789,843 |   |   |   | 1,624,680 |   |
| Total      Assets                                              |   |                                  | 2,507,217  |   |   |   | 2,581,078 |   |   |   | 2,486,733 |   |   |   | 2,006,745 |   |   |   | 1,804,895 |   |
| Deposits                                                       |   |                                  | 1,990,446  |   |   |   | 2,034,931 |   |   |   | 1,954,888 |   |   |   | 1,599,201 |   |   |   | 1,431,808 |   |
| Subordinated      Notes                                        |   |                                  | 62,887     |   |   |   | 62,887 |   |   |   | 50,717 |   |   |   | 5,155 |   |   |   | - |   |
| Long-Term      Borrowings                                      |   |                                  | 37,936     |   |   |   | 57,260 |   |   |   | 70,216 |   |   |   | 59,462 |   |   |   | 55,594 |   |
| Shareowners'      Equity                                       |   |                                  | 306,617    |   |   |   | 317,336 |   |   |   | 286,712 |   |   |   | 220,731 |   |   |   | 196,588 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year-End      Balances:                                        |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net                                                |   | $                                     | 1,915,850  |   |   | $ | 1,999,721 |   |   | $ | 2,067,494 |   |   | $ | 1,828,825 |   |   | $ | 1,341,632 |   |
| Earning      Assets                                            |   |                                  | 2,272,829  |   |   |   | 2,270,410 |   |   |   | 2,299,677 |   |   |   | 2,113,571 |   |   |   | 1,648,818 |   |
| Total      Assets                                              |   |                                  | 2,616,327  |   |   |   | 2,597,910 |   |   |   | 2,625,462 |   |   |   | 2,364,013 |   |   |   | 1,846,502 |   |
| Deposits                                                       |   |                                  | 2,142,344  |   |   |   | 2,081,654 |   |   |   | 2,079,346 |   |   |   | 1,894,886 |   |   |   | 1,474,205 |   |
| Subordinated      Notes                                        |   |                                  | 62,887     |   |   |   | 62,887 |   |   |   | 62,887 |   |   |   | 30,928 |   |   |   | - |   |
| Long-Term      Borrowings                                      |   |                                  | 26,731     |   |   |   | 43,083 |   |   |   | 69,630 |   |   |   | 68,453 |   |   |   | 46,475 |   |
| Shareowners'      Equity                                       |   |                                  | 292,675    |   |   |   | 315,770 |   |   |   | 305,776 |   |   |   | 256,800 |   |   |   | 202,809 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Data:                                               |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      Average Shares Outstanding                          |   |                                  | 17,909,396 |   |   |   | 18,584,519 |   |   |   | 18,263,855 |   |   |   | 16,805,696 |   |   |   | 16,528,109 |   |
| Diluted      Average Shares Outstanding                        |   |                                  | 17,911,587 |   |   |   | 18,609,839 |   |   |   | 18,281,243 |   |   |   | 16,810,926 |   |   |   | 16,563,986 |   |
| Shareowners      of Record(2)                                  |   |                                  | 1,750      |   |   |   | 1,805 |   |   |   | 1,716 |   |   |   | 1,598 |   |   |   | 1,512 |   |
| Banking      Locations(2)                                      |   |                                  | 70         |   |   |   | 69 |   |   |   | 69 |   |   |   | 60 |   |   |   | 57 |   |
| Full-Time      Equivalent Associates(2)                        |   |                                  | 1,097      |   |   |   | 1,056 |   |   |   | 1,013 |   |   |   | 926 |   |   |   | 795 |   |

| (1) | All      share and per share data have been adjusted to reflect the 5-for-4 stock      split effective July 1, 2005, and the 5-for-4 stock split effective June      13, 2003. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As      of the record date. The record date is on or about March 1st of the      following year. |
|-----|--------------------------------------------------------------------------------------------------|

| (3) | The consolidated financial      statements reflect the acquisitions of Quincy State Bank on March 19,      2004, Farmers and Merchants Bank of Dublin on October 15, 2004, and First      Alachua Banking Corporation on May 20,  2005. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item      7. | Management's Discussion and      Analysis of Financial Condition and Results of      Operations |
|--------------|-------------------------------------------------------------------------------------------------|

|                                                       |   | For      the Years Ended December 31, |   |
|------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                       |   | 2007                                  |   |   | 2006 |   |   | 2005 |   |
| Efficiency      ratio                                      |   |                                  | 70.13  | % |   |   | 68.87 | % |   |   | 68.46 | % |
| Effect      of intangible amortization and merger expenses |   |                                  | (3.36  | )% |   |   | (3.45 | )% |   |   | (3.67 | )% |
| Operating      efficiency ratio                            |   |                                  | 66.77  | % |   |   | 65.42 | % |   |   | 64.79 | % |

|                                                                  |   | For      the Years Ended December 31, |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                  |   | 2007                                  |   |   | 2006 |   |   | 2005 |   |
| Net      noninterest expense as a percent of average assets           |   |                                  | 2.50   | % |   |   | 2.56 | % |   |   | 2.44 | % |
| Effect      of intangible amortization and merger expenses            |   |                                  | (0.13  | )% |   |   | (0.24 | )% |   |   | (0.24 | )% |
| Operating      net noninterest expense as a percent of average assets |   |                                  | 2.37   | % |   |   | 2.32 | % |   |   | 2.20 | % |

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| §   | 2007      earnings of $29.7 million, or $1.66 per diluted share, decreases of 10.8%      and 7.3%, respectively, over2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| §   | Decline      in earnings was attributable to lower net interest income and a higher      loan loss provision, partially offset by an increase in noninterest      income. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Tax      equivalent net interest income fell 5.2% over 2006 due to higher interest      expense driven by higher average rates and an unfavorable shift in deposit      mix as clients sought higher yielding deposit products, and a $75.0      million reduction in the level of average earning  assets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Net      interest margin percentage declined 10 basis points from 2006 driven by      both a higher cost of funds and an increase in foregone interest income      associated with a higher level of nonperforming  assets. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Noninterest      income grew 6.7% over 2006 due primarily to higher deposit fees, data      processing fees, and card fees. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| §   | Noninterest      expense was very well controlled during the year and increased only .35%      from 2006, including a  litigation reserve accrual of $1.9      million related to lawsuits filed against Visa  U.S.A. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Loan      loss provision increased $4.2 million from 2006 due to a higher level of      net charge-offs ($5.3 million, or .27% of average loans in 2007) and a      higher level of required reserves reflective of the current credit      environment that has been impacted by a slowdown in housing and real      estate markets.  At year-end 2007, the allowance for loan losses      was .95% of outstanding loans and provided coverage of 72% of      nonperforming loans. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Share      repurchase activity continued in 2007 with 1,404,364 shares being      repurchased during the year.  We remain well-capitalized with a      risk based capital ratio of 14.05%. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                     |   | For      the Years Ended December 31, |    |
|----------------------------------------------------------|--------|---------------------------------------|---------|
| (Dollars in Thousands, Except      Per Share Data)(1)    |   | 2007                                  |    | 2006 |   | 2005 |   |
| Interest      Income                                     |   | $                                     | 165,323 |   | $ | 165,893 |   | $ | 140,053 |   |
| Taxable      Equivalent Adjustments                      |   |                                  | 2,420   |   |   | 1,812 |   |   | 1,222 |   |
| Total      Interest Income (FTE)                         |   |                                  | 167,743 |   |   | 167,705 |   |   | 141,275 |   |
| Interest      Expense                                    |   |                                  | 53,082  |   |   | 46,757 |   |   | 30,063 |   |
| Net      Interest Income (FTE)                           |   |                                  | 114,661 |   |   | 120,948 |   |   | 111,212 |   |
| Provision      for Loan Losses                           |   |                                  | 6,163   |   |   | 1,959 |   |   | 2,507 |   |
| Taxable      Equivalent Adjustments                      |   |                                  | 2,420   |   |   | 1,812 |   |   | 1,222 |   |
| Net      Interest Income After Provision for Loan Losses |   |                                  | 106,078 |   |   | 117,177 |   |   | 107,483 |   |
| Noninterest      Income                                  |   |                                  | 59,300  |   |   | 55,577 |   |   | 49,198 |   |
| Noninterest      Expense                                 |   |                                  | 121,992 |   |   | 121,568 |   |   | 109,814 |   |
| Income      Before Income Taxes                          |   |                                  | 43,386  |   |   | 51,186 |   |   | 46,867 |   |
| Income      Taxes                                        |   |                                  | 13,703  |   |   | 17,921 |   |   | 16,586 |   |
| Net      Income                                          |   | $                                     | 29,683  |   | $ | 33,265 |   | $ | 30,281 |   |
|                                                     |   |                                  |    |   |   |   |   |   |   |   |
| Basic      Net Income Per Share                          |   | $                                     | 1.66    |   | $ | 1.79 |   | $ | 1.66 |   |
| Diluted      Net Income Per Share                        |   | $                                     | 1.66    |   | $ | 1.79 |   | $ | 1.66 |   |

| (1) | All share and per share data have      been adjusted to reflect the 5-for-4 stock split effective July 1,      2005. |
|-----|----------------------------------------------------------------------------------------------------------------------|

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|                                                   |   | 2007    |      | 2006     |   | 2005    |   |
|--------------------------------------------------------|--------|---------|-----------|----------|--------|---------|--------|
| (Taxable      Equivalent Basis - Dollars in Thousands) |   | Balance |      | Interest |   | Rate    |   | Balance |   | Interest |   | Rate |   | Balance |   | Interest |   | Rate |   |
| ASSETS                                                 |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net of Unearned Interest(1)(2)             |   | $       | 1,934,850 |     | $      | 155,434 |   |   | 8.03 | % | $ | 2,029,397 |   | $ | 157,227 |   |   | 7.75 | % | $ | 1,968,289 |   | $ | 133,665 |   |   | 6.79 | % |
| Taxable      Investment Securities                     |   |    | 103,840   |     |   | 4,949   |   |   | 4.76 |   |   | 112,392 |   |   | 4,851 |   |   | 4.31 |   |   | 142,406 |   |   | 4,250 |   |   | 2.98 |   |
| Tax-Exempt      Investment Securities(2)               |   |    | 84,849    |     |   | 4,447   |   |   | 5.24 |   |   | 74,634 |   |   | 3,588 |   |   | 4.81 |   |   | 49,252 |   |   | 2,369 |   |   | 4.81 |   |
| Funds      Sold                                        |   |    | 59,989    |     |   | 2,913   |   |   | 4.79 |   |   | 41,854 |   |   | 2,039 |   |   | 4.81 |   |   | 27,725 |   |   | 991 |   |   | 3.53 |   |
| Total      Earning Assets                              |   |    | 2,183,528 |     |   | 167,743 |   |   | 7.68 | % |   | 2,258,277 |   |   | 167,705 |   |   | 7.42 | % |   | 2,187,672 |   |   | 141,275 |   |   | 6.46 | % |
| Cash      & Due From Banks                         |   |    | 86,692    |     |   |    |   |   |   |   |   | 100,237 |   |   |   |   |   |   |   |   | 105,787 |   |   |   |   |   |   |   |
| Allowance      for Loan Losses                         |   |    | (17,535   | )        |   |    |   |   |   |   |   | (17,486 | ) |   |   |   |   |   |   |   | (17,081 | ) |   |   |   |   |   |   |
| Other      Assets                                      |   |    | 254,532   |     |   |    |   |   |   |   |   | 240,050 |   |   |   |   |   |   |   |   | 210,355 |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                      |   | $       | 2,507,217 |     |   |    |   |   |   |   | $ | 2,581,078 |   |   |   |   |   |   |   | $ | 2,486,733 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                            |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      Accounts                                      |   | $       | $557,060  |     | $      | 10,748  |   |   | 1.93 | % | $ | 518,671 |   | $ | 7,658 |   |   | 1.48 | % | $ | 430,601 |   | $ | 2,868 |   |   | .67 | % |
| Money      Market Accounts                             |   |    | 397,193   |     |   | 13,667  |   |   | 3.44 |   |   | 370,257 |   |   | 11,687 |   |   | 3.16 |   |   | 275,830 |   |   | 4,337 |   |   | 1.57 |   |
| Savings      Accounts                                  |   |    | 119,700   |     |   | 279     |   |   | 0.23 |   |   | 134,033 |   |   | 278 |   |   | 0.21 |   |   | 152,890 |   |   | 292 |   |   | 0.19 |   |
| Other      Time Deposits                               |   |    | 474,728   |     |   | 19,993  |   |   | 4.21 |   |   | 507,283 |   |   | 17,630 |   |   | 3.48 |   |   | 550,821 |   |   | 13,637 |   |   | 2.48 |   |
| Total      Interest Bearing Deposits                   |   |    | 1,548,681 |     |   | 44,687  |   |   | 2.89 | % |   | 1,530,244 |   |   | 37,253 |   |   | 2.43 | % |   | 1,410,142 |   |   | 21,134 |   |   | 1.50 | % |
| Short-Term      Borrowings                             |   |    | 66,397    |     |   | 2,871   |   |   | 4.31 |   |   | 78,700 |   |   | 3,074 |   |   | 3.89 |   |   | 97,863 |   |   | 2,854 |   |   | 2.92 |   |
| Subordinated      Notes Payable                        |   |    | 62,887    |     |   | 3,730   |   |   | 5.93 |   |   | 62,887 |   |   | 3,725 |   |   | 5.92 |   |   | 50,717 |   |   | 2,981 |   |   | 5.88 |   |
| Other      Long-Term Borrowings                        |   |    | 37,936    |     |   | 1,794   |   |   | 4.73 |   |   | 57,260 |   |   | 2,705 |   |   | 4.72 |   |   | 70,216 |   |   | 3,094 |   |   | 4.41 |   |
| Total      Interest Bearing Liabilities                |   |    | 1,715,901 |     |   | 53,082  |   |   | 3.09 | % |   | 1,729,091 |   |   | 46,757 |   |   | 2.70 | % |   | 1,628,938 |   |   | 30,063 |   |   | 1.85 | % |
| Noninterest      Bearing Deposits                      |   |    | 441,765   |     |   |    |   |   |   |   |   | 504,687 |   |   |   |   |   |   |   |   | 544,746 |   |   |   |   |   |   |   |
| Other      Liabilities                                 |   |    | 42,934    |     |   |    |   |   |   |   |   | 29,964 |   |   |   |   |   |   |   |   | 26,337 |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES                                 |   |    | 2,200,600 |     |   |    |   |   |   |   |   | 2,263,742 |   |   |   |   |   |   |   |   | 2,200,021 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                               |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      SHAREOWNERS' EQUITY                         |   |    | 306,617   |     |   |    |   |   |   |   |   | 317,336 |   |   |   |   |   |   |   |   | 286,712 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES & EQUITY                    |   | $       | 2,507,217 |     |   |    |   |   |   |   | $ | 2,581,078 |   |   |   |   |   |   |   | $ | 2,486,733 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Spread                              |   |    |      |     |   |    |   |   | 4.59 | % |   |   |   |   |   |   |   | 4.72 | % |   |   |   |   |   |   |   | 4.61 | % |
| Net      Interest Income                               |   |    |      |     | $      | 114,661 |   |   |   |   |   |   |   | $ | 120,948 |   |   |   |   |   |   |   | $ | 111,212 |   |   |   |   |
| Net      Interest Margin(3)                            |   |    |      |     |   |    |   |   | 5.25 | % |   |   |   |   |   |   |   | 5.35 | % |   |   |   |   |   |   |   | 5.09 | % |

| (1) | Average      balances include nonaccrual loans.  Interest income includes      loan fees of $3.0 million, $3.8 million, and $3.1 million in 2007, 2006,      and 2005, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Interest      income includes the effects of taxable equivalent adjustments using a 35%      tax rate. |
|-----|--------------------------------------------------------------------------------------------------------|

| (3) | Taxable      equivalent net interest income divided by average earning      assets. |
|-----|-------------------------------------------------------------------------------------|

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|                                                   |   | 2007      Changes From 2006 |   | 2006      Changes From 2005 |   |
|--------------------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|
|                                                   |   |                        |   | Due      to Average         |   |   |   | Due      to Average |   |
| (Taxable      Equivalent Basis - Dollars in Thousands) |   | Total                       |   | Volume                      |   | Rate |   | Total |   | Volume |   | Rate |   |
| Earning      Assets:                                   |   |                        |   |                        |   |   |   |   |   |   |   |   |   |
| Loans,      Net of Unearned Interest (2)               |   | $                           | (1,792 | )                           | $      | (7,465 | )  | $ | 5,673 |   | $ | 23,562 |   | $ | 5,760 |   | $ | 17,802 |   |
| Investment      Securities:                            |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                |   |                        | 99     |                        |   | (350 | ) |   | 449 |   |   | 601 |   |   | (689 | ) |   | 1,290 |   |
| Tax-Exempt      (2)                                    |   |                        | 858    |                        |   | 491 |   |   | 367 |   |   | 1,219 |   |   | 1,220 |   |   | (1 | ) |
| Funds      Sold                                        |   |                        | 873    |                        |   | 883 |   |   | (10 | ) |   | 1,048 |   |   | 444 |   |   | 604 |   |
|                                                   |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   |                        | 38     |                        |   | (6,441 | )  |   | 6,479 |   |   | 26,430 |   |   | 6,735 |   |   | 19,695 |   |
|                                                   |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Bearing Liabilities:                     |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      Accounts                                      |   |                        | 3,090  |                        |   | 567 |   |   | 2,523 |   |   | 4,790 |   |   | 586 |   |   | 4,204 |   |
| Money      Market Accounts                             |   |                        | 1,979  |                        |   | 850 |   |   | 1,129 |   |   | 7,350 |   |   | 1,485 |   |   | 5,865 |   |
| Savings      Accounts                                  |   |                        | 2      |                        |   | (29 | ) |   | 31 |   |   | (14 | ) |   | (36 | ) |   | 22 |   |
| Time      Deposits                                     |   |                        | 2,364  |                        |   | (1,131 | ) |   | 3,495 |   |   | 3,993 |   |   | (1,078 | ) |   | 5,071 |   |
| Short-Term      Borrowings                             |   |                        | (204)  |                        |   | (424 | ) |   | 220 |   |   | 221 |   |   | (586 | ) |   | 807 |   |
| Subordinated      Notes Payable                        |   |                        | 5      |                        |   | 0 |   |   | 5 |   |   | 744 |   |   | 715 |   |   | 29 |   |
| Long-Term      Borrowings                              |   |                        | (911   | )                           |   | (913 | ) |   | 2 |   |   | (390 | ) |   | (571 | ) |   | 181 |   |
|                                                   |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   |                        | 6,325  |                        |   | (1,080 | )  |   | 7,405 |   |   | 16,694 |   |   | 515 |   |   | 16,179 |   |
|                                                   |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes      in Net Interest Income                    |   | $                           | (6,287 | )                           | $      | (5,361 | )  | $ | (926 | )  | $ | 9,736 |   | $ | 6,220 |   | $ | 3,516 |   |

| (1) | This      table shows the change in taxable equivalent net interest income for      comparative periods based on either changes in average volume or changes      in average rates for earning assets and interest bearing liabilities.      Changes which are not solely due to volume changes or solely due to rate      changes have been attributed to ratechanges. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Interest      income includes the effects of taxable equivalent adjustments using a 35%      tax rate to adjust interest on tax-exempt loans and securities to a      taxable equivalent basis. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                   | For      the Years Ended December 31, |   |
|--------------------------------------------------------|---------------------------------------|--------|
| (Dollars      in Thousands)                            | 2007                                  |   | 2006 |   | 2005 |   |
| Noninterest      Income:                               |                                  |   |   |   |   |   |
| Service      Charges on Deposit Accounts               | $                                     | 26,130 |   | $ | 24,620 |   | $ | 20,740 |   |
| Data      Processing                                   |                                  | 3,133  |   |   | 2,723 |   |   | 2,610 |   |
| Asset      Management Fees                             |                                  | 4,700  |   |   | 4,600 |   |   | 4,419 |   |
| Retail      Brokerage Fees                             |                                  | 2,510  |   |   | 2,091 |   |   | 1,322 |   |
| Gain/(Loss)      on Sale/Call of Investment Securities |                                  | 14     |   |   | (4 | ) |   | 9 |   |
| Mortgage      Banking Revenues                         |                                  | 2,596  |   |   | 3,235 |   |   | 4,072 |   |
| Merchant      Fees(1)                                  |                                  | 7,257  |   |   | 6,978 |   |   | 6,174 |   |
| Interchange      Fees(1)                               |                                  | 3,757  |   |   | 3,105 |   |   | 2,239 |   |
| ATM/Debit      Card Fees(1)                            |                                  | 2,692  |   |   | 2,519 |   |   | 2,206 |   |
| Other                                                  |                                  | 6,511  |   |   | 5,710 |   |   | 5,407 |   |
| Total      Noninterest Income                          | $                                     | 59,300 |   | $ | 55,577 |   | $ | 49,198 |   |

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|                           |   | For      the Years Ended December 31, |    |
|--------------------------------|--------|---------------------------------------|---------|
| (Dollars      in Thousands)    |   | 2007                                  |    | 2006 |   | 2005 |   |
| Noninterest      Expense:      |   |                                  |    |   |   |   |   |
| Salaries                       |   | $                                     | 49,206  |   | $ | 46,604 |   | $ | 40,978 |   |
| Associate      Benefits        |   |                                  | 11,073  |   |   | 14,251 |   |   | 12,709 |   |
| Total      Compensation        |   |                                  | 60,279  |   |   | 60,855 |   |   | 53,687 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |
| Premises                       |   |                                  | 9,347   |   |   | 9,395 |   |   | 8,293 |   |
| Equipment                      |   |                                  | 9,890   |   |   | 9,911 |   |   | 8,970 |   |
| Total      Occupancy           |   |                                  | 19,237  |   |   | 19,306 |   |   | 17,263 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |
| Legal      Fees                |   |                                  | 1,739   |   |   | 1,734 |   |   | 1,827 |   |
| Professional      Fees         |   |                                  | 3,855   |   |   | 3,402 |   |   | 3,825 |   |
| Processing      Services       |   |                                  | 1,994   |   |   | 1,863 |   |   | 1,481 |   |
| Advertising                    |   |                                  | 3,742   |   |   | 4,285 |   |   | 4,275 |   |
| Travel      and Entertainment  |   |                                  | 1,470   |   |   | 1,664 |   |   | 1,414 |   |
| Printing      and Supplies     |   |                                  | 2,124   |   |   | 2,472 |   |   | 2,372 |   |
| Telephone                      |   |                                  | 2,373   |   |   | 2,323 |   |   | 2,493 |   |
| Postage                        |   |                                  | 1,565   |   |   | 1,145 |   |   | 1,195 |   |
| Intangible      Amortization   |   |                                  | 5,834   |   |   | 6,085 |   |   | 5,440 |   |
| Merger      Expense            |   |                                  | -       |   |   | - |   |   | 438 |   |
| Interchange      Fees          |   |                                  | 6,118   |   |   | 6,010 |   |   | 5,402 |   |
| Courier      Service           |   |                                  | 641     |   |   | 1,307 |   |   | 1,360 |   |
| Miscellaneous                  |   |                                  | 11,021  |   |   | 9,117 |   |   | 7,342 |   |
| Total      Other               |   |                                  | 42,476  |   |   | 41,407 |   |   | 38,864 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |
| Total      Noninterest Expense |   | $                                     | 121,992 |   | $ | 121,568 |   | $ | 109,814 |   |

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|                                                          |   | 2006      to |    |   | Percentage    |   |    | Components      of               |   |
|---------------------------------------------------------------|--------|--------------|---------|--------|---------------|--------|---------|----------------------------------|--------|
|                                                          |   | 2007         |    |   | Of      Total |   |    | Average Earning Assets |   |
| (Average      Balances – Dollars In Thousands)          |   | Change       |    |   | Change        |   |    | 2007                             |   |   | 2006 |   |   | 2005 |   |
|                                                          |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |
| Loans:                                                        |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |
|   Commercial,      Financial, and Agricultural      |   |         | (12,244 | )      |          |   | (16.0   | )%                               |   |   | 9.5 | % |   |   | 9.7 | % |   |   | 9.5 | % |
|   Real      Estate – Construction             |   |         | (15,711 | )      |          |   | (21.0   | )%                               |   |   | 7.3 | % |   |   | 7.8 | % |   |   | 6.9 | % |
|   Real      Estate – Commercial               |   |         | (29,417 | )      |          |   | (39.0   | )%                               |   |   | 29.2 | % |   |   | 29.5 | % |   |   | 31.4 | % |
|   Real      Estate – Residential              |   |         | (38,282 | )      |          |   | (51.0   | )%                               |   |   | 31.5 | % |   |   | 32.2 | % |   |   | 31.3 | % |
|   Consumer                                          |   |         | 1,107   |   |          |   | 1.0     | %                                |   |   | 11.2 | % |   |   | 10.7 | % |   |   | 10.9 | % |
|     Total      Loans                      |   |         | (94,547 | )      |          |   | (126.00 | )%                               |   |   | 88.7 | % |   |   | 89.9 | % |   |   | 90.0 | % |
|                                                          |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      Securities:                                   |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
|   Taxable                                           |   |         | (8,552  | )      |          |   | (12.0   | )%                               |   |   | 4.8 | % |   |   | 5.0 | % |   |   | 6.5 | % |
|   Tax-Exempt                                        |   |         | 10,215  |   |          |   | 14.0    | %                                |   |   | 3.8 | % |   |   | 3.2 | % |   |   | 2.3 | % |
|     Total      Securities                 |   |         | 1,663   |   |          |   | 2.0     | %                                |   |   | 8.6 | % |   |   | 8.2 | % |   |   | 8.8 | % |
|                                                          |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Funds      Sold                                               |   |         | 18,135  |   |          |   | 24.0    | %                                |   |   | 2.7 | % |   |   | 1.9 | % |   |   | 1.2 | % |
|                                                          |   |         |    |   |          |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      Earning Assets |   | $            | (74,749 | )      |          |   | 100.0   | %                                |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

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|                                        | As      of December 31, |      |
|---------------------------------------------|-------------------------|-----------|
| (Dollars      in Thousands)                 | 2007                    |      | 2006 |   | 2005 |   | 2004 |   | 2003 |   |
| Commercial,      Financial and Agricultural | $                       | 208,864   |   | $ | 229,327 |   | $ | 218,434 |   | $ | 206,474 |   | $ | 160,048 |   |
| Real      Estate - Construction             |                    | 142,248   |   |   | 179,072 |   |   | 160,914 |   |   | 140,190 |   |   | 89,149 |   |
| Real      Estate - Commercial               |                    | 634,920   |   |   | 643,885 |   |   | 718,741 |   |   | 655,426 |   |   | 391,250 |   |
| Real      Estate - Residential              |                    | 680,800   |   |   | 709,735 |   |   | 723,336 |   |   | 600,375 |   |   | 467,790 |   |
| Consumer                                    |                    | 249,018   |   |   | 237,702 |   |   | 246,069 |   |   | 226,360 |   |   | 233,395 |   |
| Total      Loans, Net of Unearned Interest  | $                       | 1,915,850 |   | $ | 1,999,721 |   | $ | 2,067,494 |   | $ | 1,828,825 |   | $ | 1,341,632 |   |

|                                         | Maturity      Periods     |    |
|----------------------------------------------|---------------------------|---------|
| (Dollars      in Thousands)                  | One      Yearor      Less |    | Over      OneThroughFive      Years |   | OverFiveYears |   | Total |   |
| Commercial,      Financial and Agricultural  | $                         | 83,469  |   | $ | 93,283 |   | $ | 32,112 |   | $ | 208,864 |   |
| Real      Estate                             |                      | 377,077 |   |   | 224,994 |   |   | 855,897 |   |   | 1,457,968 |   |
| Consumer(1)                                  |                      | 31,134  |   |   | 208,611 |   |   | 9,273 |   |   | 249,018 |   |
| Total                                        | $                         | 491,680 |   | $ | 526,888 |   | $ | 897,282 |   | $ | 1,915,850 |   |
|                                         |                      |    |   |   |   |   |   |   |   |   |   |   |
| Loans      with Fixed Rates                  | $                         | 321,011 |   | $ | 346,198 |   | $ | 31,206 |   | $ | 698,415 |   |
| Loans      with Floating or Adjustable Rates |                      | 170,669 |   |   | 180,690 |   |   | 866,076 |   |   | 1,217,435 |   |
| Total                                        | $                         | 491,680 |   | $ | 526,888 |   | $ | 897,282 |   | $ | 1,915,850 |   |

| (1) | Demand loans and overdrafts are      reported in the category of one year or  less. |
|-----|-------------------------------------------------------------------------------------|

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|                                                                | For      the Years Ended December 31, |   |
|---------------------------------------------------------------------|---------------------------------------|--------|
| (Dollars      in Thousands)                                         | 2007                                  |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at Beginning of Year                                   | $                                     | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |   | $ | 12,429 |   |   | $ | 12,495 |   |
| Acquired      Reserves                                              |                                  | -      |   |   |   | - |   |   |   | 1,385 |   |   |   | 5,713 |   |   |   | - |   |
| Reserve      Reversal(1)                                            |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | (800 | )  |   |   | - |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-Offs:                                                        |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural                         |                                  | 1,462  |   |   |   | 841 |   |   |   | 1,287 |   |   |   | 873 |   |   |   | 426 |   |
| Real      Estate - Construction                                     |                                  | 166    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real      Estate - Commercial                                       |                                  | 709    |   |   |   | 346 |   |   |   | 255 |   |   |   | 48 |   |   |   | 91 |   |
| Real      Estate - Residential                                      |                                  | 1,429  |   |   |   | 280 |   |   |   | 321 |   |   |   | 191 |   |   |   | 228 |   |
| Consumer                                                            |                                  | 3,451  |   |   |   | 2,516 |   |   |   | 2,380 |   |   |   | 3,946 |   |   |   | 3,794 |   |
| Total      Charge-Offs                                              |                                  | 7,217  |   |   |   | 3,983 |   |   |   | 4,243 |   |   |   | 5,058 |   |   |   | 4,539 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                         |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural                         |                                  | 174    |   |   |   | 246 |   |   |   | 180 |   |   |   | 81 |   |   |   | 142 |   |
| Real      Estate - Construction                                     |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real      Estate - Commercial                                       |                                  | 14     |   |   |   | 17 |   |   |   | 3 |   |   |   | 14 |   |   |   | - |   |
| Real      Estate - Residential                                      |                                  | 36     |   |   |   | 11 |   |   |   | 37 |   |   |   | 188 |   |   |   | 18 |   |
| Consumer                                                            |                                  | 1,679  |   |   |   | 1,557 |   |   |   | 1,504 |   |   |   | 1,329 |   |   |   | 877 |   |
| Total      Recoveries                                               |                                  | 1,903  |   |   |   | 1,831 |   |   |   | 1,724 |   |   |   | 1,612 |   |   |   | 1,037 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Charge-Offs                                                |                                  | 5,314  |   |   |   | 2,152 |   |   |   | 2,519 |   |   |   | 3,446 |   |   |   | 3,502 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Loan Losses                                      |                                  | 6,163  |   |   |   | 1,959 |   |   |   | 2,507 |   |   |   | 2,141 |   |   |   | 3,436 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at End of Year                                         | $                                     | 18,066 |   |   | $ | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |   | $ | 12,429 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of Net Charge-Offs to Average Loans Outstanding          |                                  | .27    | % |   |   | .11 | % |   |   | .13 | % |   |   | .22 | % |   |   | .27 | % |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses as a Percent of Loans at End of Year |                                  | .94    | % |   |   | .86 | % |   |   | .84 | % |   |   | .88 | % |   |   | .93 | % |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses as a Multiple of Net Charge-Offs     |                                  | 3.40   | x |   |   | 8.00 | x |   |   | 6.91 | x |   |   | 4.65 | x |   |   | 3.55 | x |

| (1) | Reflects recapture of reserves      allocated to the credit card portfolio sold in August      2004. |
|-----|------------------------------------------------------------------------------------------------------|

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|                                        |   | 2007            |    | 2006                                                       |   | 2005            |   | 2004                                                       |   | 2003            |                                                       |
|---------------------------------------------|--------|-----------------|---------|------------------------------------------------------------|--------|-----------------|--------|------------------------------------------------------------|--------|-----------------|------------------------------------------------------------|
| (Dollars      in Thousands)                 |   | AllowanceAmount |    | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   |
|                                        |   |            |    |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural |   | $               | $3,106  |                                                       | 10.9   | %               |   | $                                                          | 3,900  |            | 11.5                                                       | % |   | $ | 3,663 |   | 10.6 | % |   | $ | 4,341 |   | 11.3 | % |   | $ | 2,824 |   | 11.9 | % |
| Real      Estate:                           |   |            |    |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                |   |            | 3,117   |                                                       | 7.4    |            |   |                                                       | 745    |            | 9.0                                                        |   |   |   | 762 |   | 7.8 |   |   |   | 578 |   | 7.7 |   |   |   | 313 |   | 6.6 |   |
| Commercial                                  |   |            | 4,372   |                                                       | 33.1   |            |   |                                                       | 5,996  |            | 32.2                                                       |   |   |   | 6,352 |   | 34.7 |   |   |   | 6,296 |   | 35.8 |   |   |   | 2,831 |   | 29.2 |   |
| Residential                                 |   |            | 3,733   |                                                       | 35.6   |            |   |                                                       | 1,050  |            | 35.5                                                       |   |   |   | 1,019 |   | 35.0 |   |   |   | 705 |   | 32.8 |   |   |   | 853 |   | 34.9 |   |
| Consumer                                    |   |            | 2,790   |                                                       | 13.0   |            |   |                                                       | 3,081  |            | 11.8                                                       |   |   |   | 3,105 |   | 11.9 |   |   |   | 2,966 |   | 12.4 |   |   |   | 4,169 |   | 17.4 |   |
| Not      Allocated                          |   |            | 948     |                                                       | -      |            |   |                                                       | 2,445  |            | -                                                          |   |   |   | 2,509 |   | - |   |   |   | 1,151 |   | - |   |   |   | 1,439 |   | - |   |
|                                        |   |            |    |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $               | $18,066 |                                                       | 100.0  | %               |   | $                                                          | 17,217 |            | 100.0                                                      | % |   | $ | 17,410 |   | 100.0 | % |   | $ | 16,037 |   | 100.0 | % |   | $ | 12,429 |   | 100.0 | % |

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|                                                   | As      of December 31, |   |
|--------------------------------------------------------|-------------------------|--------|
| (Dollars      in Thousands)                            | 2007                    |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonaccruing      Loans                                 | $                       | 25,119 |   |   | $ | 8,042 |   |   | $ | 5,258 |   |   | $ | 4,646 |   |   | $ | 2,346 |   |
| Restructured                                           |                    | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      Nonperforming Loans                         |                    | 25,119 |   |   |   | 8,042 |   |   |   | 5,258 |   |   |   | 4,646 |   |   |   | 2,346 |   |
| Other      Real Estate Owned                           |                    | 3,043  |   |   |   | 689 |   |   |   | 292 |   |   |   | 625 |   |   |   | 4,955 |   |
| Total      Nonperforming Assets                        | $                       | 28,162 |   |   | $ | 8,731 |   |   | $ | 5,550 |   |   | $ | 5,271 |   |   | $ | 7,301 |   |
|                                                   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Past      Due 90 Days or More                          |                    | 416    |   |   |   | 135 |   |   |   | 309 |   |   | $ | 605 |   |   | $ | 328 |   |
|                                                   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming      Loans/Loans                         |                    | 1.31   | % |   |   | .40 | % |   |   | .25 | % |   |   | .25 | % |   |   | .17 | % |
| Nonperforming      Assets/Loans Plus Other Real Estate |                    | 1.47   | % |   |   | .44 | % |   |   | .27 | % |   |   | .29 | % |   |   | .54 | % |
| Nonperforming      Assets/Capital(1)                   |                    | 9.06   | % |   |   | 2.62 | % |   |   | 1.72 | % |   |   | 1.93 | % |   |   | 3.39 | % |
| Allowance/Nonperforming      Loans                     |                    | 71.92  | % |   |   | 214.09 | % |   |   | 331.11 | % |   |   | 345.18 | % |   |   | 529.80 | % |

| (1) | For computation of this      percentage, "Capital" refers to shareowners' equity plus the allowance for      loan losses. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

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|                                     |   | As      of December 31, |    |
|------------------------------------------|--------|-------------------------|---------|
|                                     |   | 2007                    |    | 2006 |   | 2005 |   |
| (Dollars      in Thousands)              |   | AmortizedCost           |    | MarketValue |   | Weighted(1)AverageYield |   | AmortizedCost |   | MarketValue |   | Weighted(1)AverageYield |   | AmortizedCost |   | MarketValue |   | Weighted(1)AverageYield |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      GOVERNMENTS                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   | $                       | 36,441  |   | $ | 36,570 |   |   | 4.62 | % | $ | 17,329 |   | $ | 17,150 |   |   | 3.45 | % | $ | 58,032 |   | $ | 57,621 |   |   | 2.30 | % |
| Due      over 1 year through 5 years     |   |                    | 25,264  |   |   | 25,493 |   |   | 4.46 |   |   | 56,388 |   |   | 55,978 |   |   | 4.64 |   |   | 24,296 |   |   | 23,662 |   |   | 3.52 |   |
| Due      over 5 years through 10 years   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,970 |   |   | 1,948 |   |   | 3.57 |   |
| Due      over 10 years                   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 61,705  |   |   | 62,063 |   |   | 4.56% |   |   | 73,717 |   |   | 73,128 |   |   | 4.36 |   |   | 84,298 |   |   | 83,231 |   |   | 2.68 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATES      & POLITICAL SUBDIVISIONS |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | 25,675  |   |   | 25,697 |   |   | 5.19 |   |   | 31,438 |   |   | 31,300 |   |   | 4.21 |   |   | 21,097 |   |   | 21,048 |   |   | 4.66 |   |
| Due      over 1 year through 5 years     |   |                    | 64,339  |   |   | 64,304 |   |   | 5.38 |   |   | 52,183 |   |   | 51,922 |   |   | 5.25 |   |   | 32,130 |   |   | 31,702 |   |   | 4.11 |   |
| Due      over 5 years through 10 years   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 384 |   |   | 393 |   |   | 6.53 |   |
| Due      over 10 years                   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 90,014  |   |   | 90,001 |   |   | 5.32% |   |   | 83,621 |   |   | 83,222 |   |   | 4.86 |   |   | 53,611 |   |   | 53,143 |   |   | 4.34 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MORTGAGE-BACKED      SECURITIES(2)       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | 4,125   |   |   | 4,117 |   |   | 4.23 |   |   | 3,568 |   |   | 3,571 |   |   | 5.37 |   |   | 339 |   |   | 337 |   |   | 3.97 |   |
| Due      over 1 year through 5 years     |   |                    | 15,043  |   |   | 15,070 |   |   | 4.89 |   |   | 14,942 |   |   | 14,732 |   |   | 4.58 |   |   | 14,958 |   |   | 14,685 |   |   | 4.12 |   |
| Due      over 5 years through 10 years   |   |                    | 7,166   |   |   | 7,100 |   |   | 5.21 |   |   | 4,734 |   |   | 4,593 |   |   | 5.02 |   |   | 5,651 |   |   | 5,509 |   |   | 5.09 |   |
| Due      over 10 years                   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 26,334  |   |   | 26,287 |   |   | 4.87% |   |   | 23,244 |   |   | 22,896 |   |   | 4.79 |   |   | 20,948 |   |   | 20,531 |   |   | 4.38 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      SECURITIES                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 1 year through 5 years     |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 5 years through 10 years   |   |                    | 1,000   |   |   | 1,061 |   |   | 5.00 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 10 years(3)                |   |                    | 11,307  |   |   | 11,307 |   |   | 5.90 |   |   | 12,648 |   |   | 12,648 |   |   | 5.78 |   |   | 14,114 |   |   | 14,114 |   |   | 4.75 |   |
| TOTAL                                    |   |                    | 12,307  |   |   | 12,368 |   |   | 5.90 |   |   | 12,648 |   |   | 12,648 |   |   | 5.78 |   |   | 14,114 |   |   | 14,114 |   |   | 4.75 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      INVESTMENT SECURITIES         |   | $                       | 190,360 |   | $ | 190,719 |   |   | 5.08 | % | $ | 193,230 |   | $ | 191,894 |   |   | 4.72 | % | $ | 172,971 |   | $ | 171,019 |   |   | 3.57 | % |

| (1) | Weighted      average yields are calculated on the basis of the amortized cost of the      security. The weighted average yields on tax-exempt obligations are      computed on a taxable equivalent basis using a 35% tax    rate. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Based      on weighted average life. |
|-----|--------------------------------------|

| (3) | Federal      Home Loan Bank Stock and Federal Reserve Bank Stock are included in this      category for weighted average yield, but do not have stated      maturities. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                   | As      of December 31, |
|----------------------------------------|-------------------------|
| (In      Years)                        | 2007                    |   |   | 2006 |   |   | 2005 |
| U.S.      Governments                  |                    | 1.09 |   |   |   | 1.76 |   |   |   | 1.01 |   |
| States      and Political Subdivisions |                    | 1.48 |   |   |   | 1.39 |   |   |   | 1.31 |   |
| Mortgage-Backed      Securities        |                    | 3.47 |   |   |   | 3.05 |   |   |   | 5.05 |   |
| Other      Securities                  |                    | - |   |   |   | - |   |   |   | - |   |
| TOTAL                                  |                    | 1.63 |   |   |   | 1.75 |   |   |   | 1.65 |   |

| Moody's      Rating |   | Amortized      Cost |   |   | Percentage |   |
|---------------------|--------|---------------------|--------|--------|------------|--------|
| AAA                 |   | $                   | 84,041 |   |       |   | 93.36 | % |
| AA-1                |   |                | -      |   |       |   | - |   |
| AA-2                |   |                | -      |   |       |   | - |   |
| AA-3                |   |                | -      |   |       |   | - |   |
| AA                  |   |                | -      |   |       |   | - |   |
| Not      Rated(1)   |   |                | 5,973  |   |       |   | 6.64 |   |
| Total               |   | $                   | 90,014 |   |       |   | 100.00 | % |

| (1) | All of the securities not rated      by Moody's are rated "AA" or higher by  S&P. |
|-----|---------------------------------------------------------------------------------------|

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|                                           |          2006 to |     | Percentage    |    | Components      of  |   |
|------------------------------------------------|---------------------------------|----------|---------------|---------|---------------------|--------|
|                                           | 2007                            |     | of      Total |    | Total      Deposits |   |
| (Average      Balances - Dollars in Thousands) | Change                          |     | Change        |    | 2007                |   | 2006 |   | 2005 |   |
| Noninterest      Bearing Deposits              | $                               | (62,922) |          | (141.4) | %                   | 22.2   | % | 24.8 | % | 27.9 | % |
| NOW      Accounts                              |                            | 38,389   |          | 86.3    |                | 28.0   |   | 25.5 |   | 22.0 |   |
| Money      Market Accounts                     |                            | 26,936   |          | 60.6    |                | 20.0   |   | 18.2 |   | 14.1 |   |
| Savings                                        |                            | (14,333) |          | (32.2)  |                | 6.0    |   | 6.6 |   | 7.8 |   |
| Time      Deposits                             |                            | (32,555) |          | (73.2)  |                | 23.9   |   | 24.9 |   | 28.2 |   |
| Total      Deposits                            | $                               | (44,485) |          | 100.0   | %                   | 100.0  | % | 100.0 | % | 100.0 | % |

|                                | December      31, 2007            |    |
|-------------------------------------|-----------------------------------|---------|
| (Dollars      in Thousands)         | Time      Certificates of Deposit |    | Percent |   |
| Three      months or less           | $                                 | 34,043  |   | 26.24 | % |
| Over      three through six months  |                              | 31,235  |   | 24.07 |   |
| Over      six through twelve months |                              | 52,823  |   | 40.71 |   |
| Over      twelve months             |                              | 11,656  |   | 8.98 |   |
| Total                               | $                                 | 129,757 |   | 100.00 | % |

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|                                         | Payments      Due By Period |    |
|----------------------------------------------|-----------------------------|---------|
| (Dollars      in Thousands)                  | <      1 Yr              |    | 1 –      3 Yrs |   | 3 –      5 Yrs |   | >      5 Years |   | Total |   |
| Federal      Home Loan Bank Advances         | $                           | 14,604  |   | $ | 5,493 |   | $ | 5,157 |   | $ | 13,403 |   | $ | 38,657 |   |
| Subordinated      Notes Payable              |                        | -       |   |   | - |   |   | - |   |   | 62,887 |   |   | 62,887 |   |
| Operating      Lease Obligations             |                        | 1,425   |   |   | 2,318 |   |   | 1,398 |   |   | 5,700 |   |   | 10,841 |   |
| Time      Deposit Maturities                 |                        | 408,041 |   |   | 57,101 |   |   | 2,231 |   |   | - |   |   | 467,373 |   |
| Liability      for Unrecognized Tax Benefits |                        | 95      |   |   | 179 |   |   | 1,502 |   |   | 2,031 |   |   | 3,807 |   |
| Total      Contractual Cash Obligations      | $                           | 424,165 |   | $ | 65,091 |   | $ | 10,288 |   | $ | 84,021 |   | $ | 583,565 |   |

| (Dollars      in Thousands)                             | 2007   |    |   | 2006   |   |    | 2005   |   |
|---------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Common      Stock                                       |   | 172     |   |   |   | 185     |   |   |   | 186 |   |
| Additional      Paid-in Capital                         |   | 38,243  |   |   |   | 80,654  |   |   |   | 83,304 |   |
| Retained      Earnings                                  |   | 260,325 |   |   |   | 243,242 |   |   |   | 223,532 |   |
| Subtotal                                                |   | 298,740 |   |   |   | 324,081 |   |   |   | 307,022 |   |
| Accumulated      Other Comprehensive (Loss), Net of Tax |   | (6,065  | )      |   |   | (8,311  | )      |   |   | (1,246 | ) |
| Total      Shareowners' Equity                          | $      | 292,675 |   |   | $      | 315,770 |   |   | $ | 305,776 |   |

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| §   | Compliance      with state and federal laws andregulations; |
|--------------------|-------------------------------------------------------------|

| §   | Our      capital position and our ability to meet our financial      obligations; |
|--------------------|-----------------------------------------------------------------------------------|

| §   | Projected      earnings and asset levels; and |
|--------------------|-----------------------------------------------|

| §   | The      ability of the Bank and us to funddividends. |
|--------------------|-------------------------------------------------------|

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|                  |   | Adjustment |          | Description |                                                                                                                                                                               | Years      Impacted |
|-----------------------|--------|------------|---------------|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
|                  |   |       |          |        |                                                                                                                                                                               |                |   |
| Operating      Leases |   | $          |  715,000 |        | Establish      deferred rent payable due to difference in using straight-line accounting      method for operating leases (required per SFAS 13) versus cash-basis      accounting |                |   1990      - 2006 |
|                  |   |       |          |        |                                                                                                                                                                               |                |   |
| Supplies              |   | $          | 518,000       |        | Overstatement      of prepaid supply account due to improper recognition of sales tax and      freight charges when supplies were used                                             |                |  1998      - 2006 |
|                  |   |       |          |        |                                                                                                                                                                               |                |   |
| Total                 |   | $          | 1,233,000     |        |                                                                                                                                                                               |                |   |

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| ITEM      7A. | QUANTITATIVE AND QUALITATIVE      DISCLOSURE ABOUT MARKET RISK |
|---------------|----------------------------------------------------------------|

----

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|                             |   | As      of December 31, 2007 |      |   |        |   |
|----------------------------------|--------|------------------------------|-----------|--------|-------------|--------|
| (Dollars      in Thousands)      |   | Year      1                  |      |   | Year      2 |   |   | Year      3 |   |   | Year      4 |   |   | Year      5 |   |   | Beyond |   |   | Total |   |   | Fair      Value(5) |   |
| Loans                            |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                  |   | $                            | 306,159   |   |        | $      | 145,265 |   |   | $ | 99,036 |   |   | $ | 39,048 |   |   | $ | 23,130 |   |   | $ | 22,374 |   |   | $ | 635,012 |   |   | $ | 664,241 |   |
| Average      Interest Rate       |   |                         | 6.76      | %      |        |   | 8.11 | % |   |   | 8.05 | % |   |   | 8.48 | % |   |   | 8.56 | % |   |   | 6.68 | % |   |   | 7.44 | % |   |   |   |   |
| Floating      Rate(2)            |   |                         | 1,047,020 |   |        |   | 134,999 |   |   |   | 65,503 |   |   |   | 8,884 |   |   |   | 6,687 |   |   |   | 17,725 |   |   |   | 1,280,818 |   |   |   | 1,336,486 |   |
| Average      Interest Rate       |   |                         | 7.75      | %      |        |   | 7.69 | % |   |   | 7.70 | % |   |   | 7.89 | % |   |   | 8.05 | % |   |   | 8.14 | % |   |   | 7.75 | % |   |   |   |   |
| Investment      Securities(3)    |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                  |   |                         | 96,458    |   |        |   | 49,810 |   |   |   | 33,051 |   |   |   | 4,271 |   |   | 2022 |   |   |   | 2,279 |   |   |   | 187,891 |   |   |   | 187,891 |   |
| Average      Interest Rate       |   |                         | 3.58      | %      |        |   | 3.96 | % |   |   | 3.72 | % |   |   | 4.60 | % |   |   | 5.15 | % |   |   | 5.27 | % |   |   | 3.76 | % |   |   |   |   |
| Floating      Rate               |   |                         | 2,287     |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,287 |   |   |   | 2,287 |   |
| Average      Interest Rate       |   |                         | 5.12      | %      |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5.12 | % |   |   |   |   |
| Other      Earning Assets        |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Floating      Rate               |   |                         | 166,260   |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 166,260 |   |   |   | 166,260 |   |
| Average      Interest Rate       |   |                         | 4.24      | %      |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4.24 | % |   |   |   |   |
| Total      Financial Assets      |   | $                            | 1,618,184 |   |        | $      | 330,074 |   |   | $ | 197,590 |   |   | $ | 52,203 |   |   | $ | 31,839 |   |   | $ | 42,378 |   |   | $ | 2,272,268 |   |   | $ | 2,357,165 |   |
| Average      Interest Rate       |   |                         | 4.27      | %      |        |   | 7.31 | % |   |   | 7.21 | % |   |   | 8.06 | % |   |   | 8.23 | % |   |   | 7.21 | % |   |   | 5.16 | % |   |   |   |   |
|                             |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits(4)                      |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate Deposits         |   | $                            | 409,537   |   |        | $      | 43,005 |   |   | $ | 11,476 |   |   | $ | 2,619 |   |   | $ | 2,073 |   |   | $ | 158 |   |   | $ | 468,868 |   |   | $ | 420,251 |   |
| Average      Interest Rate       |   |                         | 4.31      | %      |        |   | 4.22 | % |   |   | 3.99 | % |   |   | 4.05 | % |   |   | 3.96 | % |   |   | 4.91 | % |   |   | 4.29 | % |   |   |   |   |
| Floating      Rate Deposits      |   |                         | 1,240,914 |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,240,914 |   |   |   | 1,240,914 |   |
| Average      Interest Rate       |   |                         | 2.25      | %      |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2.25 | % |   |   |   |   |
| Other      Interest Bearing      |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                      |   |                         |      |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate Debt             |   |                         | 2,977     |   |        |   | 3,368 |   |   |   | 3,120 |   |   |   | 3,077 |   |   |   | 3,233 |   |   |   | 10,956 |   |   |   | 26,731 |   |   |   | 28,284 |   |
| Average      Interest Rate       |   |                         | 4.82      | %      |        |   | 4.84 | % |   |   | 4.89 | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   | 4.90 | % |   |   | 4.90 | % |   |   |   |   |
| Floating      Rate Debt          |   |                         | 52,553    |   |        |   | 31,506 |   |   |   | 31,959 |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   | 116,018 |   |   |   | 116,393 |   |
| Average      Interest Rate       |   |                         | 3.71      | %      |        |   | 2.99 | % |   |   | 6.07 | % |   |   | 6.07 | % |   |   | - |   |   |   | - |   |   |   | 3.35 | % |   |   |   |   |
| Total      Financial Liabilities |   | $                            | 1,705,981 |   |        | $      | 77,879 |   |   | $ | 46,555 |   |   | $ | 5,696 |   |   | $ | 5,306 |   |   | $ | 11,114 |   |   | $ | 1,852,531 |   |   | $ | 1,805,842 |   |
| Average      interest Rate       |   |                         | 2.80      | %      |        |   | 2.54 | % |   |   | 5.48 | % |   |   | 4.55 | % |   |   | 4.57 | % |   |   | 4.90 | % |   |   | 2.88 | % |   |   |   |   |

| (1) | Based upon expected cash flows      unless otherwise indicated. |
|-----|-----------------------------------------------------------------|

| (2) | Based upon a combination of      expected maturities and re-pricing  opportunities. |
|-----|-------------------------------------------------------------------------------------|

| (3) | Based upon contractual maturity,      except for callable and floating rate securities, which are based on      expected maturity and weighted average life,      respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Savings,      NOW and money market accounts can be re-priced at any time, therefore, all      such balances are included as floating rate deposits. Time deposit      balances are classified according tomaturity. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Fair      value of loans does not include a reduction for the allowance for loan      losses. |
|-----|-----------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

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|                                                         |   | 2007   |      |   | 2006   |   |
|--------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| (Dollars      in Thousands, Except Per Share Data)           |   | Fourth |      |   | Third  |   |   | Second |   |   | First |   |   | Fourth |   |   | Third |   |   | Second |   |   | First |   |
| Summary      of Operations:                                  |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                         |   | $      | 40,786    |   |   | $      | 41,299 |   |   | $ | 41,724 |   |   | $ | 41,514 |   |   | $ | 42,600 |   |   | $ | 42,512 |   |   | $ | 41,369 |   |   | $ | 39,412 |   |
| Interest      Expense                                        |   |   | 13,241    |   |   |   | 13,389 |   |   |   | 13,263 |   |   |   | 13,189 |   |   |   | 13,003 |   |   |   | 12,289 |   |   |   | 11,182 |   |   |   | 10,282 |   |
| Net      Interest Income                                     |   |   | 27,545    |   |   |   | 27,910 |   |   |   | 28,461 |   |   |   | 28,325 |   |   |   | 29,597 |   |   |   | 30,223 |   |   |   | 30,187 |   |   |   | 29,130 |   |
| Provision      for Loan Losses                               |   |   | 1,699     |   |   |   | 1,552 |   |   |   | 1,675 |   |   |   | 1,237 |   |   |   | 460 |   |   |   | 711 |   |   |   | 121 |   |   |   | 667 |   |
| Net      Interest Income AfterProvision      for Loan Losses |   |   | 25,846    |   |   |   | 26,358 |   |   |   | 26,786 |   |   |   | 27,088 |   |   |   | 29,137 |   |   |   | 29,512 |   |   |   | 30,066 |   |   |   | 28,463 |   |
| Noninterest      Income                                      |   |   | 15,823    |   |   |   | 14,431 |   |   |   | 15,084 |   |   |   | 13,962 |   |   |   | 14,385 |   |   |   | 14,144 |   |   |   | 14,003 |   |   |   | 13,045 |   |
| Noninterest      Expense                                     |   |   | 31,614    |   |   |   | 29,919 |   |   |   | 29,897 |   |   |   | 30,562 |   |   |   | 29,984 |   |   |   | 30,422 |   |   |   | 31,070 |   |   |   | 30,092 |   |
| Income      Before Provision for Income Taxes                |   |   | 10,055    |   |   |   | 10,870 |   |   |   | 11,973 |   |   |   | 10,488 |   |   |   | 13,538 |   |   |   | 13,234 |   |   |   | 12,999 |   |   |   | 11,416 |   |
| Provision      for Income Taxes                              |   |   | 2,391     |   |   |   | 3,699 |   |   |   | 4,082 |   |   |   | 3,531 |   |   |   | 4,688 |   |   |   | 4,554 |   |   |   | 4,684 |   |   |   | 3,995 |   |
| Net      Income                                              |   | $      | 7,664     |   |   | $      | 7,171 |   |   | $ | 7,891 |   |   | $ | 6,957 |   |   | $ | 8,850 |   |   | $ | 8,680 |   |   | $ | 8,315 |   |   | $ | 7,421 |   |
| Net      Interest Income (FTE)                               |   | $      | 28,196    |   |   | $      | 28,517 |   |   | $ | 29,050 |   |   | $ | 28,898 |   |   | $ | 30,152 |   |   | $ | 30,745 |   |   | $ | 30,591 |   |   | $ | 29,461 |   |
|                                                         |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      Common Share:                                       |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income Basic                                        |   | $      | 0.44      |   |   | $      | 0.41 |   |   | $ | 0.43 |   |   | $ | 0.38 |   |   | $ | 0.48 |   |   | $ | 0.47 |   |   | $ | 0.44 |   |   | $ | 0.40 |   |
| Net      Income Diluted                                      |   |   | 0.44      |   |   |   | 0.41 |   |   |   | 0.43 |   |   |   | 0.38 |   |   |   | 0.48 |   |   |   | 0.47 |   |   |   | 0.44 |   |   |   | 0.40 |   |
| Dividends      Declared                                      |   |   | 0.185     |   |   |   | 0.175 |   |   |   | 0.175 |   |   |   | 0.175 |   |   |   | 0.175 |   |   |   | 0.163 |   |   |   | 0.163 |   |   |   | 0.163 |   |
| Diluted      Book Value                                      |   |   | 17.03     |   |   |   | 16.95 |   |   |   | 16.87 |   |   |   | 16.97 |   |   |   | 17.01 |   |   |   | 17.18 |   |   |   | 16.81 |   |   |   | 16.65 |   |
| Market      Price:                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                         |   |   | 34.00     |   |   |   | 36.40 |   |   |   | 33.69 |   |   |   | 35.91 |   |   |   | 35.98 |   |   |   | 33.25 |   |   |   | 35.39 |   |   |   | 37.97 |   |
| Low                                                          |   |   | 24.60     |   |   |   | 27.69 |   |   |   | 29.12 |   |   |   | 29.79 |   |   |   | 30.14 |   |   |   | 29.87 |   |   |   | 29.51 |   |   |   | 33.79 |   |
| Close                                                        |   |   | 28.22     |   |   |   | 31.20 |   |   |   | 31.34 |   |   |   | 33.30 |   |   |   | 35.30 |   |   |   | 31.10 |   |   |   | 30.20 |   |   |   | 35.55 |   |
|                                                         |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected      Average                                        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances:                                                    |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                        |   | $      | 1,908,069 |   |   | $      | 1,907,235 |   |   | $ | 1,944,969 |   |   | $ | 1,980,224 |   |   | $ | 2,003,719 |   |   | $ | 2,025,112 |   |   | $ | 2,040,656 |   |   | $ | 2,048,642 |   |
| Earning      Assets                                          |   |   | 2,191,230 |   |   |   | 2,144,737 |   |   |   | 2,187,236 |   |   |   | 2,211,560 |   |   |   | 2,238,066 |   |   |   | 2,241,158 |   |   |   | 2,278,817 |   |   |   | 2,275,667 |   |
| Assets                                                       |   |   | 2,519,682 |   |   |   | 2,467,703 |   |   |   | 2,511,252 |   |   |   | 2,530,790 |   |   |   | 2,557,357 |   |   |   | 2,560,155 |   |   |   | 2,603,090 |   |   |   | 2,604,458 |   |
| Deposits                                                     |   |   | 2,016,736 |   |   |   | 1,954,160 |   |   |   | 1,987,418 |   |   |   | 2,003,726 |   |   |   | 2,028,453 |   |   |   | 2,023,523 |   |   |   | 2,047,755 |   |   |   | 2,040,248 |   |
| Shareowners’      Equity                               |   |   | 299,342   |   |   |   | 301,536 |   |   |   | 309,352 |   |   |   | 316,484 |   |   |   | 323,903 |   |   |   | 318,041 |   |   |   | 315,794 |   |   |   | 311,461 |   |
| Common      Equivalent Average Shares:                       |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   |   | 17,444    |   |   |   | 17,709 |   |   |   | 18,089 |   |   |   | 18,409 |   |   |   | 18,525 |   |   |   | 18,530 |   |   |   | 18,633 |   |   |   | 18,652 |   |
| Diluted                                                      |   |   | 17,445    |   |   |   | 17,719 |   |   |   | 18,089 |   |   |   | 18,420 |   |   |   | 18,569 |   |   |   | 18,565 |   |   |   | 18,653 |   |   |   | 18,665 |   |
|                                                         |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on Assets                                        |   |   | 1.21      | %      |   |   | 1.15 | % |   |   | 1.26 | % |   |   | 1.11 | % |   |   | 1.37 | % |   |   | 1.35 | % |   |   | 1.28 | % |   |   | 1.16 | % |
| Return      on Equity                                        |   |   | 10.16     | %      |   |   | 9.44 | % |   |   | 10.23 | % |   |   | 8.91 | % |   |   | 10.84 | % |   |   | 10.83 | % |   |   | 10.56 | % |   |   | 9.66 | % |
| Net      Interest Margin (FTE)                               |   |   | 5.10      | %      |   |   | 5.27 | % |   |   | 5.33 | % |   |   | 5.29 | % |   |   | 5.35 | % |   |   | 5.45 | % |   |   | 5.38 | % |   |   | 5.25 | % |
| Efficiency      Ratio                                        |   |   | 68.51     | %      |   |   | 66.27 | % |   |   | 64.44 | % |   |   | 67.90 | % |   |   | 63.99 | % |   |   | 64.35 | % |   |   | 66.23 | % |   |   | 67.20 | % |

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| PAGE     |                                                           |
|----------|----------------------------------------------------------------|
|     |                                                           |
|  54 | Reports of Independent Registered Public Accounting      Firms |
|     |                                                           |
|  56 | Consolidated Statements of Financial      Condition            |
|     |                                                           |
|  57 |  Consolidated Statements of  Income                       |
|     |                                                           |
|  58 | Consolidated Statements of Changes in Shareowners'      Equity |
|     |                                                           |
|  59 | Consolidated Statements of Cash    Flows                       |
|     |                                                           |
| 60       | Notes to Consolidated Financial      Statements                |

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CAPITAL

|                                                                                                                                                                                        | As      of December 31, |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|-----------|
| (Dollars      in Thousands)                                                                                                                                                                 | 2007                    |      |   | 2006 |   |
| ASSETS                                                                                                                                                                                      |                    |      |   |   |   |
| Cash      and Due From Banks                                                                                                                                                                | $                       | 93,437    |   |   | $ | 98,769 |   |
| Federal      Funds Sold and Interest Bearing Deposits                                                                                                                                       |                    | 166,260   |   |   |   | 78,795 |   |
| Total      Cash and Cash Equivalents                                                                                                                                                        |                    | 259,697   |   |   |   | 177,564 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Investment      Securities, Available-for-Sale                                                                                                                                              |                    | 190,719   |   |   |   | 191,894 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Loans,      Net of Unearned Interest                                                                                                                                                        |                    | 1,915,850 |   |   |   | 1,999,721 |   |
| Allowance      for Loan Losses                                                                                                                                                              |                    | (18,066   | ) |   |   | (17,217 | ) |
| Loans,      Net                                                                                                                                                                             |                    | 1,897,784 |   |   |   | 1,982,504 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Premises      and Equipment, Net                                                                                                                                                            |                    | 98,612    |   |   |   | 86,538 |   |
| Goodwill                                                                                                                                                                                    |                    | 84,811    |   |   |   | 84,811 |   |
| Other      Intangible Assets                                                                                                                                                                |                    | 13,757    |   |   |   | 19,591 |   |
| Other      Assets                                                                                                                                                                           |                    | 70,947    |   |   |   | 55,008 |   |
| Total      Assets                                                                                                                                                                           | $                       | 2,616,327 |   |   | $ | 2,597,910 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                 |                    |      |   |   |   |   |   |
| Deposits:                                                                                                                                                                                   |                    |      |   |   |   |   |   |
| Noninterest      Bearing Deposits                                                                                                                                                           | $                       | 432,659   |   |   | $ | 490,014 |   |
| Interest      Bearing Deposits                                                                                                                                                              |                    | 1,709,685 |   |   |   | 1,591,640 |   |
| Total      Deposits                                                                                                                                                                         |                    | 2,142,344 |   |   |   | 2,081,654 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Short-Term      Borrowings                                                                                                                                                                  |                    | 53,131    |   |   |   | 65,023 |   |
| Subordinated      Notes Payable                                                                                                                                                             |                    | 62,887    |   |   |   | 62,887 |   |
| Other      Long-Term Borrowings                                                                                                                                                             |                    | 26,731    |   |   |   | 43,083 |   |
| Other      Liabilities                                                                                                                                                                      |                    | 38,559    |   |   |   | 29,493 |   |
| Total      Liabilities                                                                                                                                                                      |                    | 2,323,652 |   |   |   | 2,282,140 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                                                                                                                                                                    |                    |      |   |   |   |   |   |
| Preferred      Stock, $.01 par value; 3,000,000 shares authorized; no shares issued and      outstanding                                                                                    |                    | -         |   |   |   | - |   |
| Common      Stock, $.01 par value; 90,000,000 shares authorized; 17,182,553 and      18,518,398 shares issued and outstanding at December 31, 2007 and December      31, 2006, respectively |                    | 172       |   |   |   | 185 |   |
| Additional      Paid-In Capital                                                                                                                                                             |                    | 38,243    |   |   |   | 80,654 |   |
| Retained      Earnings                                                                                                                                                                      |                    | 260,325   |   |   |   | 243,242 |   |
| Accumulated      Other Comprehensive Loss, Net of Tax                                                                                                                                       |                    | (6,065    | ) |   |   | (8,311 | ) |
| Total      Shareowners' Equity                                                                                                                                                              |                    | 292,675   |   |   |   | 315,770 |   |
| Total      Liabilities and Shareowners' Equity                                                                                                                                              | $                       | 2,616,327 |   |   | $ | 2,597,910 |   |

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CAPITAL

|                                                  | For      the Years Ended December 31, |    |
|-------------------------------------------------------|---------------------------------------|---------|
| (Dollars in Thousands, Except      Per Share Data)(1) | 2007                                  |    |   | 2006 |   |   | 2005 |   |
| INTEREST      INCOME                                  |                                  |    |   |   |   |   |   |   |
| Interest      and Fees on Loans                       | $                                     | 154,567 |   |   | $ | 156,666 |   |   | $ | 133,268 |   |
| Investment      Securities:                           |                                  |    |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury                                    |                                  | 574     |   |   |   | 453 |   |   |   | 412 |   |
| U.S.      Government Agencies and Corporations        |                                  | 3,628   |   |   |   | 3,605 |   |   |   | 3,223 |   |
| States      and Political Subdivisions                |                                  | 2,894   |   |   |   | 2,337 |   |   |   | 1,545 |   |
| Other      Securities                                 |                                  | 747     |   |   |   | 793 |   |   |   | 614 |   |
| Funds      Sold                                       |                                  | 2,913   |   |   |   | 2,039 |   |   |   | 991 |   |
| Total      Interest Income                            |                                  | 165,323 |   |   |   | 165,893 |   |   |   | 140,053 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| INTEREST      EXPENSE                                 |                                  |    |   |   |   |   |   |   |   |   |   |
| Deposits                                              |                                  | 44,687  |   |   |   | 37,253 |   |   |   | 21,134 |   |
| Short-Term      Borrowings                            |                                  | 2,871   |   |   |   | 3,075 |   |   |   | 2,854 |   |
| Subordinated      Notes Payable                       |                                  | 3,730   |   |   |   | 3,725 |   |   |   | 2,981 |   |
| Other      Long-Term Borrowings                       |                                  | 1,794   |   |   |   | 2,704 |   |   |   | 3,094 |   |
| Total      Interest Expense                           |                                  | 53,082  |   |   |   | 46,757 |   |   |   | 30,063 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| NET      INTEREST INCOME                              |                                  | 112,241 |   |   |   | 119,136 |   |   |   | 109,990 |   |
| Provision      for Loan Losses                        |                                  | 6,163   |   |   |   | 1,959 |   |   |   | 2,507 |   |
| Net      Interest Income After                        |                                  |    |   |   |   |   |   |   |   |   |   |
| Provision      for Loan Losses                        |                                  | 106,078 |   |   |   | 117,177 |   |   |   | 107,483 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| NONINTEREST      INCOME                               |                                  |    |   |   |   |   |   |   |   |   |   |
| Service      Charges on Deposit Accounts              |                                  | 26,130  |   |   |   | 24,620 |   |   |   | 20,740 |   |
| Data      Processing                                  |                                  | 3,133   |   |   |   | 2,723 |   |   |   | 2,610 |   |
| Asset      Management Fees                            |                                  | 4,700   |   |   |   | 4,600 |   |   |   | 4,419 |   |
| Securities      Transactions                          |                                  | 14      |   |   |   | (4 | ) |   |   | 9 |   |
| Mortgage      Banking Revenues                        |                                  | 2,596   |   |   |   | 3,235 |   |   |   | 4,072 |   |
| Bank      Card Fees                                   |                                  | 13,706  |   |   |   | 12,602 |   |   |   | 10,619 |   |
| Other                                                 |                                  | 9,021   |   |   |   | 7,801 |   |   |   | 6,729 |   |
| Total      Noninterest Income                         |                                  | 59,300  |   |   |   | 55,577 |   |   |   | 49,198 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| NONINTEREST      EXPENSE                              |                                  |    |   |   |   |   |   |   |   |   |   |
| Salaries      and Associate Benefits                  |                                  | 60,279  |   |   |   | 60,855 |   |   |   | 53,687 |   |
| Occupancy,      Net                                   |                                  | 9,347   |   |   |   | 9,395 |   |   |   | 8,293 |   |
| Furniture      and Equipment                          |                                  | 9,890   |   |   |   | 9,911 |   |   |   | 8,970 |   |
| Intangible      Amortization                          |                                  | 5,834   |   |   |   | 6,085 |   |   |   | 5,440 |   |
| Merger      Expense                                   |                                  | -       |   |   |   | - |   |   |   | 438 |   |
| Other                                                 |                                  | 36,642  |   |   |   | 35,322 |   |   |   | 32,986 |   |
| Total      Noninterest Expense                        |                                  | 121,992 |   |   |   | 121,568 |   |   |   | 109,814 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAXES                       |                                  | 43,386  |   |   |   | 51,186 |   |   |   | 46,867 |   |
| Income      Taxes                                     |                                  | 13,703  |   |   |   | 17,921 |   |   |   | 16,586 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                       | $                                     | 29,683  |   |   | $ | 33,265 |   |   | $ | 30,281 |   |
| BASIC      NET INCOME PER SHARE                       | $                                     | 1.66    |   |   | $ | 1.79 |   |   | $ | 1.66 |   |
| DILUTED      NET INCOME PER SHARE                     | $                                     | 1.66    |   |   | $ | 1.79 |   |   | $ | 1.66 |   |
|                                                  |                                  |    |   |   |   |   |   |   |   |   |   |
| Average      Basic Common Shares Outstanding          |                                  | 17,909  |   |   |   | 18,585 |   |   |   | 18,264 |   |
| Average      Diluted Common Shares Outstanding        |                                  | 17,912  |   |   |   | 18,610 |   |   |   | 18,281 |   |

| (1) | All      share and per share data have been adjusted to reflect the 5-for-4 stock      split effective July 1, 2005. |
|-----|----------------------------------------------------------------------------------------------------------------------|

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| (Dollars in Thousands, Except      Per Share Data)(1)                                    | CommonStock |   |   | AdditionalPaid-InCapital |   |    | RetainedEarnings |   |   | Accumulated      OtherComprehensive(Loss)      Income,Net      of Taxes |   |   | Total  |   |
|------------------------------------------------------------------------------------------|-------------|--------|--------|--------------------------|--------|---------|------------------|--------|--------|-------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                     |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |
| Balance,      December 31, 2004                                                          | $           | 177    |   |                     | $      | 52,328  |             |   | $      | 204,648                                                                 |   |   | $      | (353   |   |   | $ | 256,800 |   |
| Comprehensive      Income:                                                               |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                          |        | -      |   |                     |   | -       |             |   |   | 30,281                                                                  |   |   |   | -      |   |   |   | - |   |
| Net      Change in Unrealized Loss On Available-for-Sale Securities (net of      tax)    |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | (893   | ) |   |   | - |   |
| Total      Comprehensive Income                                                          |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 29,388 |   |
| Cash      Dividends ($.584 per share)                                                    |        | -      |   |                     |   | -       |             |   |   | (11,397                                                                 | )      |   |   | -      |   |   |   | (11,397 | ) |
| Stock      Performance Plan Compensation                                                 |        | -      |   |                     |   | 968     |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 968 |   |
| Issuance      of Common Stock                                                            |        | 9      |   |                     |   | 30,008  |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 30,017 |   |
|                                                                                     |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2005                                                          |        | 186    |   |                     |   | 83,304  |             |   |   | 223,532                                                                 |   |   |   | (1,246 | ) |   |   | 305,776 |   |
| Cumulative      Effect Adjustment upon adoption of SAB No. 108 (net of      tax)         |        | -      |   |                     |   | -       |             |   |   | (1,233                                                                  | )      |   |   | -      |   |   |   | (1,233 | ) |
| Balance      (adjusted), December 31, 2005                                               |        | 186    |   |                     |   | 83,304  |             |   |   | 222,299                                                                 |   |   |   | (1,246 | ) |   |   | 304,543 |   |
| Comprehensive      Income:                                                               |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                          |        | -      |   |                     |   | -       |             |   |   | 33,265                                                                  |   |   |   | -      |   |   |   | - |   |
| Net      Change in Unrealized Loss On Available-for-Sale Securities (net of      tax)    |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | 412    |   |   |   | - |   |
| Total      Comprehensive Income                                                          |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 33,677 |   |
| Establish      Pension Liability upon adoption of SFAS No. 158 (net of      tax)         |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | (7,477 | ) |   |   | (7,477 | ) |
| Cash      Dividends ($.663 per share)                                                    |        | -      |   |                     |   | -       |             |   |   | (12,322                                                                 | )      |   |   | -      |   |   |   | (12,322 | ) |
| Stock      Performance Plan Compensation                                                 |        | -      |   |                     |   | 1,673   |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 1,673 |   |
| Issuance      of Common Stock                                                            |        | 1      |   |                     |   | 1,035   |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 1,036 |   |
| Repurchase      of Common Stock                                                          |        | (2     | )      |                     |   | (5,358  | )                |   |   | -                                                                       |   |   |   | -      |   |   |   | (5,360 | ) |
|                                                                                     |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2006                                                          |        | 185    |   |                     |   | 80,654  |             |   |   | 243,242                                                                 |   |   |   | (8,311 | ) |   |   | 315,770 |   |
| Comprehensive      Income:                                                               |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                          |        | -      |   |                     |   | -       |             |   |   | 29,683                                                                  |   |   |   | -      |   |   |   | - |   |
| Net      Change in Unrealized Loss On Available-for-Sale Securities (net of      tax)    |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | 1,080  |   |   |   |   |   |
| Net      Change in Funded Status of Defined Pension Plan and SERP Plan (net of      tax) |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | 1,166  |   |   |   |   |   |
| Total      Comprehensive Income                                                          |        | -      |   |                     |   | -       |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 31,929 |   |
| Miscellaneous      – Other                                                         |        | -      |   |                     |   | -       |             |   |   | 223                                                                     |   |   |   | -      |   |   |   | 223 |   |
| Cash      Dividends ($.710 per share)                                                    |        | -      |   |                     |   | -       |             |   |   | (12,823                                                                 | )      |   |   | -      |   |   |   | (12,823 | ) |
| Stock      Performance Plan Compensation                                                 |        | -      |   |                     |   | 265     |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 265 |   |
| Issuance      of Common Stock                                                            |        | 1      |   |                     |   | 571     |             |   |   | -                                                                       |   |   |   | -      |   |   |   | 572 |   |
| Repurchase      of Common Stock                                                          |        | (14    | )      |                     |   | (43,247 | )                |   |   | -                                                                       |   |   |   | -      |   |   |   | (43,261 | ) |
|                                                                                     |        |   |   |                     |   |    |             |   |   |                                                                    |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007                                                          | $           | 172    |   |                     | $      | 38,243  |             |   | $      | 260,325                                                                 |   |   | $      | (6,065 | ) |   | $ | 292,675 |   |

| (1) | All      share, per share, and shareowners' equity data have been adjusted to      reflect the 5-for-4 stock split effective July 1  2005. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

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CAPITAL

|                                                                                                                      | For      the Years Ended December 31, |     |
|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------|----------|
| (Dollars      in Thousands)                                                                                               | 2007                                  |     |   | 2006 |   |   | 2005 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |
| Net      Income                                                                                                           | $                                     | 29,683   |   |   | $ | 33,265 |   |   | $ | 30,281 |   |
| Adjustments      to Reconcile Net Income to Cash Provided by Operating      Activities:                                   |                                  |     |   |   |   |   |   |   |   |   |   |
| Provision      for Loan Losses                                                                                            |                                  | 6,163    |   |   |   | 1,959 |   |   |   | 2,507 |   |
| Depreciation                                                                                                              |                                  | 6,338    |   |   |   | 6,795 |   |   |   | 5,899 |   |
| Net      Securities Amortization                                                                                          |                                  | 279      |   |   |   | 582 |   |   |   | 1,454 |   |
| Amortization      of Intangible Assets                                                                                    |                                  | 5,834    |   |   |   | 6,085 |   |   |   | 5,440 |   |
| (Gain)Loss      on Securities Transactions                                                                                |                                  | (14      | ) |   |   | 4 |   |   |   | (9 | ) |
| Origination  of      Loans Held-for-Sale                                                                        |                                  | (158,390 | ) |   |   | (190,945 | ) |   |   | (219,171 | ) |
| Proceeds      From Sales of Loans Held-for-Sale                                                                           |                                  | 162,835  |   |   |   | 194,569 |   |   |   | 227,853 |   |
| Net      Gain From Sales of Loans Held-for Sale                                                                           |                                  | (2,596   | ) |   |   | (3,235 | ) |   |   | (4,072 | ) |
| Non-Cash      Compensation                                                                                                |                                  | 265      |   |   |   | 1,673 |   |   |   | 968 |   |
| Deferred      Income Taxes                                                                                                |                                  | 1,328    |   |   |   | 1,614 |   |   |   | 182 |   |
| Net      Increase  in Other Assets                                                                              |                                  | (12,894  | ) |   |   | (11,327 | ) |   |   | (11,839 | ) |
| Net      Increase in Other Liabilities                                                                                    |                                  | 8,115    |   |   |   | 5,148 |   |   |   | 9,264 |   |
| Net      Cash Provided by Operating Activities                                                                            |                                  | 46,946   |   |   |   | 46,187 |   |   |   | 48,757 |   |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |   |   |   |
| Securities      Available-for-Sale:                                                                                       |                                  |     |   |   |   |   |   |   |   |   |   |
| Purchases                                                                                                                 |                                  | (56,289  | ) |   |   | (102,628 | ) |   |   | (45,717 | ) |
| Sales                                                                                                                     |                                  | -        |   |   |   | 283 |   |   |   | 35,142 |   |
| Payments,      Maturities, and Calls                                                                                      |                                  | 58,894   |   |   |   | 81,500 |   |   |   | 81,783 |   |
| Net      Decrease (Increase) in Loans                                                                                     |                                  | 74,058   |   |   |   | 64,213 |   |   |   | (127,715 | ) |
| Net      Cash Acquired From Acquisitions                                                                                  |                                  | -        |   |   |   | - |   |   |   | 37,412 |   |
| Purchase      of Premises & Equipment                                                                                 |                                  | (18,613  | ) |   |   | (20,145 | ) |   |   | (18,336 | ) |
| Proceeds      From Sales of Premises & Equipment                                                                      |                                  | 203      |   |   |   | 630 |   |   |   | 897 |   |
| Net      Cash Provided By (Used In) Investing Activities                                                                  |                                  | 58,253   |   |   |   | 23,853 |   |   |   | (36,534 | ) |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Deposits                                                                                  |                                  | 60,690   |   |   |   | 2,308 |   |   |   | (17,125 | ) |
| Net      Decrease in Short-Term Borrowings                                                                                |                                  | (12,263  | ) |   |   | (31,412 | ) |   |   | (33,085 | ) |
| Proceeds      from Subordinated Notes Payable                                                                             |                                  | -        |   |   |   | - |   |   |   | 31,959 |   |
| (Decrease)      Increase in Other Long-Term Borrowings                                                                    |                                  | (10,618  | ) |   |   | 3,250 |   |   |   | 23,600 |   |
| Repayment      of Other Long-Term Borrowings                                                                              |                                  | (5,363   | ) |   |   | (16,335 | ) |   |   | (2,380 | ) |
| Dividends      Paid                                                                                                       |                                  | (12,823  | ) |   |   | (12,322 | ) |   |   | (11,397 | ) |
| Repurchase      of Common Stock                                                                                           |                                  | (43,261  | )  |   |   | (5,360 | ) |   |   | - |   |
| Issuance      of Common Stock                                                                                             |                                  | 572      |   |   |   | 1,036 |   |   |   | 1,019 |   |
| Net      Cash Used In Financing Activities                                                                                |                                  | (23,066  | ) |   |   | (58,835 | ) |   |   | (7,409 | ) |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| NET      CHANGE IN CASH AND CASH EQUIVALENTS                                                                              |                                  | 82,133   |   |   |   | 11,205 |   |   |   | 4,814 |   |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents at Beginning of Year                                                                       |                                  | 177,564  |   |   |   | 166,359 |   |   |   | 161,545 |   |
| Cash      and Cash Equivalents at End of Year                                                                             | $                                     | 259,697  |   |   | $ | 177,564 |   |   | $ | 166,359 |   |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES:                                                                                            |                                  |     |   |   |   |   |   |   |   |   |   |
|   Interest      Paid on Deposits                                                                                | $                                     | 44,510   |   |   | $ | 36,509 |   |   | $ | 19,964 |   |
|   Interest      Paid on Debt                                                                                    | $                                     | 8,463    |   |   | $ | 9,688 |   |   | $ | 8,754 |   |
|   Taxes      Paid                                                                                               | $                                     | 12,431   |   |   | $ | 16,797 |   |   | $ | 15,923 |   |
|   Loans      Transferred to Other Real Estate                                                                   | $                                     | 3,494    |   |   | $ | 1,018 |   |   | $ | 2,689 |   |
|   Cumulative      Effect Adjustment to Beginning Retained Earnings – SAB      108                         | $                                     | -        |   |   | $ | 1,233 |   |   | $ | - |   |
| Cumulative      Effect Adjustment to Other Comprehensive Income to Record Minimum Pension      Liability – SFAS 158 | $                                     | -        |   |   | $ | 7,477 |   |   | $ | - |   |
|   Issuance      of Common Stock as Non-Cash Compensation                                                        | $                                     | 1,160    |   |   | $ | 711 |   |   | $ | 339 |   |
|   Transfer      of Current Portion of Long-Term Borrowingsto      Short-Term Borrowings                         | $                                     | 12,318   |   |   | $ | 13,061 |   |   | $ | 20,043 |   |

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|                                                                                       |   | As      Reported |   |   | Misapplied |   |   | As      Revised |   |
|--------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------|--------|--------|-----------------|--------|
| Statements      of Changes in Stockholders’ Equity - Comprehensive Income            |   | $                | 26,200 |   |       | $      | 7,477  |            |   | $ | 33,677 |   |
| Note      21 – Comprehensive Income – Net Other Comprehensive Gain      (Loss) |   | $                | (7,065 | )      |       | $      | 7,477  |            |   | $ | 412 |   |

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|                  | Adjustment |          | Description | Years      Impacted                                                                                                                                                         |
|-----------------------|------------|---------------|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |       |          |        |                                                                                                                                                                        |   |
| Operating      Leases | $          |  715,000 |        | Establish      deferred rent payable due to difference in using straight-line accounting      for operating leases (required per SFAS 13) versus cash-basis      accounting |   1990      - 2006 |
|                  |       |          |        |                                                                                                                                                                        |   |
| Supplies              | $          | 518,000       |        | Overstatement      of prepaid supply account due to improper recognition of sales tax and      freight charges when supplies were used                                      |  1998      - 2006 |
|                  |       |          |        |                                                                                                                                                                        |   |
| Total                 | $          | 1,233,000     |        |                                                                                                                                                                        |   |

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|                                           | 2007          |    |
|------------------------------------------------|---------------|---------|
| (Dollars      in Thousands)                    | AmortizedCost |    |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | MarketValue |   |
| U.S.      Treasury                             | $             | 16,216  |   |   | $ | 97 |   |   | $ | - |   |   | $ | 16,313 |   |
| U.S.      Government Agencies and Corporations |          | 45,489  |   |   |   | 295 |   |   |   | 34 |   |   |   | 45,750 |   |
| States      and Political Subdivisions         |          | 90,014  |   |   |   | 164 |   |   |   | 177 |   |   |   | 90,001 |   |
| Mortgage-Backed      Securities                |          | 26,334  |   |   |   | 85 |   |   |   | 132 |   |   |   | 26,287 |   |
| Other      Securities(1)                       |          | 12,307  |   |   |   | 61 |   |   |   | 0 |   |   |   | 12,368 |   |
| Total      Investment Securities               | $             | 190,360 |   |   | $ | 702 |   |   | $ | 343 |   |   | $ | 190,719 |   |

|                                           | 2006          |    |
|------------------------------------------------|---------------|---------|
| (Dollars      in Thousands)                    | AmortizedCost |    |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | MarketValue |   |
| U.S.      Treasury                             | $             | 12,098  |   |   | $ | 16 |   |   | $ | 49 |   |   | $ | 12,065 |   |
| U.S.      Government Agencies and Corporations |          | 61,619  |   |   |   | 37 |   |   |   | 593 |   |   |   | 61,063 |   |
| States      and Political Subdivisions         |          | 83,621  |   |   |   | 16 |   |   |   | 415 |   |   |   | 83,222 |   |
| Mortgage-Backed      Securities                |          | 23,244  |   |   |   | 23 |   |   |   | 371 |   |   |   | 22,896 |   |
| Other      Securities(1)                       |          | 12,648  |   |   |   | - |   |   |   | - |   |   |   | 12,648 |   |
| Total      Investment Securities               | $             | 193,230 |   |   | $ | 92 |   |   | $ | 1,428 |   |   | $ | 191,894 |   |

| (1) | Includes FHLB  and FRB stock      recorded at cost of $6.5 million and $4.8 million, respectively, at      December 31, 2007 and $7.8 million and $4.8 million, respectively, at      December 31, 2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Dollars      in Thousands) | Year       |   | TotalProceeds |   |   | GrossRealized      Gains |   |   | GrossRealized      Losses |   |
|-----------------------------|------------|--------|---------------|--------|--------|--------------------------|--------|--------|---------------------------|--------|
|                        |  2007 |   | $             | 53,011 |   |                     | $      | 14     |                      |   | $ | - |   |
|                        |  2006 |   | $             | 283    |   |                     | $      | -      |                      |   | $ | 4 |   |
|                        |  2005 |   | $             | 35,142 |   |                     | $      | 9      |                      |   | $ | - |   |

| (Dollars      in Thousands)           |   | Amortized      Cost                                                                                         |   | Market      Value |
|---------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|--------|-------------------|
| Due      in one year or less          | $      |              66,240                        |   |  $           |              66,384 |   |
| Due      after one through five years |   |            104,647                                   |   |              |               104,867 |   |
| Due      after five through ten years |   |                  8,166 |   |              |                   8,161 |   |
| No      Maturity                      |   |                11,307            |   |              |                 11,307 |   |
| Total      Investment Securities      | $      |             190,360                             |   |  $           |            190,719 |   |

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|                                           |                         |   | December      31, 2007          |   |        |   |
|------------------------------------------------|------------------------------|--------|---------------------------------|--------|-------------|--------|
|                                           | Less      Than12      months |   | Greater      Than12      Months |   | Total       |   |
| (Dollars      in Thousands)                    | MarketValue                  |   | UnrealizedLosses                |   | MarketValue |   | UnrealizedLosses |   | MarketValue |   | UnrealizedLosses |   |
| U.S.      Treasury                             |                         | $      | 12,258                          |   |        | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | 12,258 |   |   | $ | - |   |
| U.S.      Government Agencies and Corporations |                         |   | 39,278                          |   |        |   | 16 |   |   |   | 6,471 |   |   |   | 18 |   |   |   | 45,749 |   |   |   | 34 |   |
| States      and Political Subdivisions         |                         |   | 70,701                          |   |        |   | 147 |   |   |   | 13,924 |   |   |   | 30 |   |   |   | 84,625 |   |   |   | 177 |   |
| Mortgage-Backed      Securities                |                         |   | 14,058                          |   |        |   | 4 |   |   |   | 10,376 |   |   |   | 128 |   |   |   | 24,434 |   |   |   | 132 |   |
| Total      Investment Securities               |                         | $      | 136,295                         |   |        | $      | 167 |   |   | $ | 30,771 |   |   | $ | 176 |   |   | $ | 167,066 |   |   | $ | 343 |   |

|                                           |                         |   | December      31, 2006          |   |        |   |
|------------------------------------------------|------------------------------|--------|---------------------------------|--------|-------------|--------|
|                                           | Less      Than12      months |   | Greater      Than12      Months |   | Total       |   |
| (Dollars      in Thousands)                    | MarketValue                  |   | UnrealizedLosses                |   | MarketValue |   | UnrealizedLosses |   | MarketValue |   | UnrealizedLosses |   |
| U.S.      Treasury                             |                         | $      | 12,065                          |   |        | $      | 49 |   |   | $ | - |   |   | $ | - |   |   | $ | 12,065 |   |   | $ | 49 |   |
| U.S.      Government Agencies and Corporations |                         |   | 29,308                          |   |        |   | 172 |   |   |   | 30,242 |   |   |   | 421 |   |   |   | 59,550 |   |   |   | 593 |   |
| States      and Political Subdivisions         |                         |   | 46,576                          |   |        |   | 219 |   |   |   | 30,087 |   |   |   | 196 |   |   |   | 76,663 |   |   |   | 415 |   |
| Mortgage-Backed      Securities                |                         |   | 9,156                           |   |        |   | 1 |   |   |   | 13,560 |   |   |   | 370 |   |   |   | 22,716 |   |   |   | 371 |   |
| Total      Investment Securities               |                         | $      | 97,105                          |   |        | $      | 441 |   |   | $ | 73,889 |   |   | $ | 987 |   |   | $ | 170,994 |   |   | $ | 1,428 |   |

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| (Dollars      in Thousands)                 | 2007   |      |   | 2006   |   |
|---------------------------------------------|--------|-----------|--------|--------|--------|
| Commercial,      Financial and Agricultural | $      | 208,864   |   |   | $      | 229,327 |   |
| Real      Estate - Construction             |   | 142,248   |   |   |   | 179,072 |   |
| Real      Estate - Commercial Mortgage      |   | 634,920   |   |   |   | 643,885 |   |
| Real      Estate – Residential(1)     |   | 485,608   |   |   |   | 531,968 |   |
| Real      Estate - Home Equity              |   | 192,428   |   |   |   | 173,597 |   |
| Real      Estate - Loans Held-for-Sale      |   | 2,764     |   |   |   | 4,170 |   |
| Consumer                                    |   | 249,018   |   |   |   | 237,702 |   |
| Total      Loans, Net of Unearned Interest  | $      | 1,915,850 |   |   | $      | 1,999,721 |   |

| (Dollars      in Thousands)                     | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance,      Beginning of Year                 | $      | 17,217 |   |   | $      | 17,410 |   |   | $ | 16,037 |   |
| Acquired      Reserves                          |   | -      |   |   |   | -      |   |   |   | 1,385 |   |
| Provision      for Loan Losses                  |   | 6,163  |   |   |   | 1,959  |   |   |   | 2,507 |   |
| Recoveries      on Loans Previously Charged-Off |   | 1,903  |   |   |   | 1,830  |   |   |   | 1,724 |   |
| Loans      Charged-Off                          |   | (7,217 | )      |   |   | (3,982 | )      |   |   | (4,243 | ) |
| Balance,      End of Year                       | $      | 18,066 |   |   | $      | 17,217 |   |   | $ | 17,410 |   |

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|                                  | 2007             |   | 2006               |   |
|---------------------------------------|------------------|--------|--------------------|--------|
| (Dollars      in Thousands)           | ValuationBalance |   | ValuationAllowance |   | ValuationBalance |   | ValuationAllowance |   |
| Impaired      Loans:                  |             |   |               |   |   |   |   |   |   |   |   |   |
| With      Related Credit Allowance    |             | $      | 21,615             |   |   | $ | 4,702 |   |   | $ | 6,085 |   |   | $ | 2,255 |   |
| Without      Related Credit Allowance |             |   | 15,019             |   |   |   | - |   |   |   | 4,574 |   |   |   | - |   |

| (Dollars      in Thousands)                        | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Average      Recorded Investment in Impaired Loans | $      | 23,922 |   |   | $      | 12,782 |   |   | $ | 9,786 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income on Impaired Loans             |   |   |   |   |   |   |   |   |   |   |   |
| Recognized                                         | $      | 761    |   |   | $      | 398    |   |   | $ | 218 |   |
| Collected      in Cash                             |   | 761    |   |   |   | 398    |   |   |   | 218 |   |

|                                  | 2007        |    |   | 2006                    |   |
|---------------------------------------|-------------|---------|--------|-------------------------|--------|
| (Dollars      in Thousands)           | GrossAmount |    |   | AccumulatedAmortization |   |   | GrossAmount |   |   | AccumulatedAmortization |   |
| Core      Deposits Intangibles        | $           | 47,176  |   |                    | $      | 34,598 |   |   | $ | 47,176 |   |   | $ | 28,955 |   |
| Goodwill                              |        | 84,811  |   |                    |   | - |   |   |   | 84,811 |   |   |   | - |   |
| Customer      Relationship Intangible |        | 1,867   |   |                    |   | 688 |   |   |   | 1,867 |   |   |   | 497 |   |
| Non-Compete      Agreement            |        | 537     |   |                    |   | 537 |   |   |   | 537 |   |   |   | 537 |   |
| Total      Intangible Assets          | $           | 134,391 |   |                    | $      | 35,823 |   |   | $ | 134,391 |   |   | $ | 29,989 |   |

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| (Dollars      in Thousands)      | 2007   |    |   | 2006   |   |
|----------------------------------|--------|---------|--------|--------|--------|
| Land                             | $      | 22,722  |   |   | $      | 22,597 |   |
| Buildings                        |   | 90,335  |   |   |   | 78,676 |   |
| Fixtures      and Equipment      |   | 55,783  |   |   |   | 52,129 |   |
| Total                            |   | 168,840 |   |   |   | 153,402 |   |
| Accumulated      Depreciation    |   | (70,228 | )      |   |   | (66,864 | ) |
| Premises      and Equipment, Net | $      | 98,612  |   |   | $      | 86,538 |   |

| (Dollars      in Thousands) | 2007   |      |   | 2006   |   |
|-----------------------------|--------|-----------|--------|--------|--------|
| NOW      Accounts           | $      | 744,093   |   |   | $      | 599,433 |   |
| Money      Market Accounts  |   | 386,619   |   |   |   | 384,568 |   |
| Savings      Accounts       |   | 111,600   |   |   |   | 125,500 |   |
| Time      Deposits          |   | 467,373   |   |   |   | 482,139 |   |
| Total                       | $      | 1,709,685 |   |   | $      | 1,591,640 |   |

| (Dollars      in Thousands) |   |    |
|-----------------------------|--------|---------|
| 2008                        | $      | 408,041 |   |
| 2009                        |   | 43,277  |   |
| 2010                        |   | 11,205  |   |
| 2011                        |   | 2,619   |   |
| 2012      and thereafter    |   | 2,231   |   |
| Total                       | $      | 467,373 |   |

| (Dollars      in Thousands)      | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| NOW      Accounts                | $      | 10,748 |   |   | $      | 7,658  |   |   | $ | 2,868 |   |
| Money      Market Accounts       |   | 13,666 |   |   |   | 11,687 |   |   |   | 4,337 |   |
| Savings      Accounts            |   | 280    |   |   |   | 278    |   |   |   | 292 |   |
| Time      Deposits < $100,000 |   | 13,990 |   |   |   | 12,087 |   |   |   | 9,247 |   |
| Time      Deposits > $100,000 |   | 6,003  |   |   |   | 5,543  |   |   |   | 4,390 |   |
| Total                            | $      | 44,687 |   |   | $      | 37,253 |   |   | $ | 21,134 |   |

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| (Dollars      in Thousands)                     |   | FederalFundsPurchased |   | SecuritiesSold      UnderRepurchaseAgreements |   | OtherShort-TermBorrowings |   |
|-------------------------------------------------|--------|-----------------------|--------|-----------------------------------------------|--------|---------------------------|--------|
| 2007                                            |   |                  |   |                                          |   |                      |   |
| Balance      at December 31,                    |   | $                     | 7,550  |                                          | $      | 32,806                    |   | $ | 12,775 | (1)  |
| Maximum      indebtedness at any month end      |   |                  | 26,400 |                                          |   | 47,047                    |   |   | 13,664 |   |
| Daily      average indebtedness outstanding     |   |                  | 15,812 |                                          |   | 38,683                    |   |   | 11,902 |   |
| Average      rate paid for the year             |   |                  | 4.89   | %                                             |   | 4.11                      | %      |   | 4.17 | % |
| Average      rate paid on period-end borrowings |   |                  | 2.47   | %                                             |   | 3.32                      | %      |   | 4.29 | % |
|                                            |   |                  |   |                                          |   |                      |   |   |   |   |
| 2006                                            |   |                  |   |                                          |   |                      |   |   |   |   |
| Balance      at December 31,                    |   | $                     | 11,950 |                                          | $      | 38,022                    |   | $ | 15,051 | (1)  |
| Maximum      indebtedness at any month end      |   |                  | 39,225 |                                          |   | 55,321                    |   |   | 34,738 |   |
| Daily      average indebtedness outstanding     |   |                  | 16,645 |                                          |   | 34,335                    |   |   | 27,720 |   |
| Average      rate paid for the year             |   |                  | 4.82   | %                                             |   | 3.79                      | %      |   | 3.47 | % |
| Average      rate paid on period-end borrowings |   |                  | 4.61   | %                                             |   | 3.79                      | %      |   | 3.90 | % |
|                                            |   |                  |   |                                          |   |                      |   |   |   |   |
| 2005                                            |   |                  |   |                                          |   |                      |   |   |   |   |
| Balance      at December 31,                    |   | $                     | 11,925 |                                          | $      | 38,702                    |   | $ | 32,346 |   |
| Maximum      indebtedness at any month end      |   |                  | 26,825 |                                          |   | 65,206                    |   |   | 67,122 |   |
| Daily      average indebtedness outstanding     |   |                  | 31,644 |                                          |   | 39,784                    |   |   | 26,435 |   |
| Average      rate paid for the year             |   |                  | 3.36   | %                                             |   | 2.30                      | %      |   | 3.32 | % |
| Average      rate paid on period-end borrowings |   |                  | 3.88   | %                                             |   | 3.21                      | %      |   | 3.48 | % |

| (1) | Includes      FHLB debt and TT&L (client tax deposits) balance of $12.2 million and      $0.6 million, respectively at December 31, 2007 and $13.0 million and $2.0      million, respectively at December 31,2006. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (Dollars      in Thousands)                            | 2007   |   | 2006   |   |
|--------------------------------------------------------|--------|--------|--------|--------|
| Due      on February 13, 2007, fixed rate of 3.05%(1)  |   | -      |   |   | 3,000 |   |
| Due      on April 24, 2007, fixed rate of 7.30%(1)     |   | -      |   |   | 23 |   |
| Due      on September 10, 2007, fixed rate of 4.29%(1) |   | -      |   |   | 10,000 |   |
| Due      on May 30, 2008, fixed rate of 2.50%(1)       |   | 21     |   |   | 61 |   |
| Due      on June 13, 2008, fixed rate of 5.40%(1)      |   | 72     |   |   | 214 |   |
| Due      on September 8, 2008, fixed rate of 4.32%(1)  |   | 10,000 |   |   | 10,000 |   |
| Due      on November 10, 2008, fixed rate of 4.12%(1)  |   | 2,105  |   |   | 2,189 |   |
| Due      on October 19, 2009, fixed rate of 3.69%      |   | 302    |   |   | 470 |   |
| Due      on November 10, 2010, fixed rate of 4.72%     |   | 695    |   |   | 722 |   |
| Due      on December 31, 2010, fixed rate of 3.85%     |   | 524    |   |   | 699 |   |
| Due      on December 18, 2012, fixed rate of 4.84%     |   | 542    |   |   | 566 |   |
| Due      on March 18, 2013, fixed rate of 6.37%        |   | 499    |   |   | 571 |   |
| Due      on June 17, 2013, fixed rate of 3.53%         |   | 692    |   |   | 793 |   |
| Due      on June 17, 2013, fixed rate of 3.85%         |   | 85     |   |   | 89 |   |
| Due      on June 17, 2013, fixed rate of 4.11%         |   | 1,660  |   |   | 1,720 |   |
| Due      on September 23, 2013, fixed rate of 5.64%    |   | 727    |   |   | 824 |   |
| Due      on January 26, 2014, fixed rate of 5.79%      |   | 1,131  |   |   |   |   |
| Due      on January 27, 2014, fixed rate of 5.79%      |   | 1,641  |   |   | 1,191 |   |
| Due      on March 10, 2014, fixed rate of 4.21%        |   | 505    |   |   | 571 |   |
| Due      on May 27, 2014, fixed rate of 5.92%          |   | 386    |   |   | 435 |   |
| Due      on June 2, 2014, fixed rate of 4.52%          |   | 2,726  |   |   | 3,078 |   |
| Due      on July 20, 2016, fixed rate of 6.27%         |   | 1,016  |   |   | 1,134 |   |
| Due      on October 3, 2016, fixed rate of 5.41%       |   | 265    |   |   | 295 |   |
| Due      on October 31, 2016, fixed rate of 5.16%      |   | 589    |   |   | 656 |   |
| Due      on June 27, 2017, fixed rate of 5.53%         |   | 665    |   |   | 735 |   |
| Due      on October 31, 2017, fixed rate of 4.79%      |   | 819    |   |   | 903 |   |
| Due      on December 11, 2017, fixed rate of 4.78%     |   | 728    |   |   | 802 |   |
| Due      on February 26, 2018, fixed rate of 4.36%     |   | 1,735  |   |   | 1,906 |   |
| Due      on September 18, 2018, fixed rate of 5.15%    |   | 516    |   |   | 564 |   |
| Due      on November 5, 2018, fixed rate of 5.10%      |   | 3,364  |   |   | 3,499 |   |
| Due      on December 3, 2018, fixed rate of 4.87%      |   | 541    |   |   | 590 |   |
| Due      on December 17, 2018, fixed rate of 6.33%     |   | 1,401  |   |   | 1,486 |   |
| Due      on December 24, 2018, fixed rate of 6.29%     |   | -      |   |   | 681 |   |
| Due      on February 16, 2021, fixed rate of 3.00%     |   | 776    |   |   | 814 |   |
| Due      on January 18, 2022, fixed rate of 5.25%      |   | 1,033  |   |   | 3,250 |   |
| Due      on May 30, 2023, fixed rate of 2.50%          |   | 896    |   |   | 933 |   |
| Total      Outstanding                                 | $      | 38,657 |   | $      | 55,464 |   |

| (1) | $12.2      million is classified as short-termborrowings. |
|-----|-----------------------------------------------------------|

| (Dollars      in Thousands) |   |                                                   |
|-----------------------------|--------|--------------------------------------------------------|
| 2008                        | $      | 14,604                                                 |  (1) |
| 2009                        |   | 2,465                                                  |   |
| 2010                        |   | 3,028                                                  |   |
| 2011                        |   | 2,322                                                  |   |
| 2012                        |   | 2,835                                                  |   |
| 2013      and thereafter    |   | 13,403                                                 |   |
| Total                       | $      |         38,657 |   |

| (1) | $12.2      million is classified as short-termborrowings. |
|-----|-----------------------------------------------------------|

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| (Dollars      in Thousands) | 2007   |   |    | 2006   |   |   | 2005   |   |
|-----------------------------|--------|--------|---------|--------|--------|--------|--------|--------|
| Current:                    |   |   |    |   |   |   |   |   |
| Federal                     | $      | 13,603 |    |   | $      | 14,780 |   |   | $ | 15,114 |   |
| State                       |   | 280    |    |   |   | 1,527  |   |   |   | 1,290 |   |
| Deferred:                   |   |   |    |   |   |   |   |   |   |   |   |
| Federal                     |   | (32    | )       |   |   | 1,384  |   |   |   | 156 |   |
| State                       |   | (148   | )  |   |   | 230    |   |   |   | 26 |   |
| Total                       | $      | 13,703 |    |   | $      | 17,921 |   |   | $ | 16,586 |   |

| (Dollars      in Thousands)                | 2007   |   |   | 2006   |   |   | 2005   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Tax      Expense at Federal Statutory Rate | $      | 15,185 |   |   | $      | 17,915 |   |   | $ | 16,403 |   |
| Increases      (Decreases) Resulting From: |   |   |   |   |   |   |   |   |   |   |   |
| Tax-Exempt      Interest Income            |   | (1,630 | )      |   |   | (1,334 | )      |   |   | (1,054 | ) |
| State      Taxes, Net of Federal Benefit   |   | 86     |   |   |   | 1,142  |   |   |   | 856 |   |
| Other                                      |   | 62     |   |   |   | 198    |   |   |   | 381 |   |
| Actual      Tax Expense                    | $      | 13,703 |   |   | $      | 17,921 |   |   | $ | 16,586 |   |

| (Dollars      in Thousands)                     | 2007   |   |   | 2006   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|
| Deferred      Tax Assets attributable to:       |   |   |   |   |   |
| Allowance      for Loan Losses                  | $      | 7,110  |   |   | $      | 6,659 |   |
| Associate      Benefits                         |   | 510    |   |   |   | 700 |   |
| Unrealized      Losses on Investment Securities |   | -      |   |   |   | 503 |   |
| Accrued      Pension/SERP                       |   | 3,964  |   |   |   | 4,795 |   |
| Interest      on Nonperforming Loans            |   | 603    |   |   |   | 170 |   |
| State      Net Operating Loss Carry Forwards    |   | 511    |   |   |   | 399 |   |
| Intangible      Assets                          |   | 95     |   |   |   | 70 |   |
| Core      Deposit Intangible                    |   | 1,360  |   |   |   | 278 |   |
| Contingency      Reserve                        |   | 746    |   |   |   | - |   |
| Accrued      Expense                            |   | 611    |   |   |   | 612 |   |
| Leases                                          |   | 464    |   |   |   | 449 |   |
| Other                                           |   | 517    |   |   |   | 386 |   |
| Total      Deferred Tax Assets                  | $      | 16,491 |   |   | $      | 15,021 |   |
|                                            |   |   |   |   |   |   |   |
| Deferred      Tax Liabilities attributable to:  |   |   |   |   |   |   |   |
| Depreciation      on Premises and Equipment     | $      | 3,290  |   |   | $      | 4,434 |   |
| Deferred      Loan Fees and Costs               |   | 3,887  |   |   |   | 2,550 |   |
| Unrealized      Gains on Investment Securities  |   | 113    |   |   |   | - |   |
| Intangible      Assets                          |   | 1,619  |   |   |   | 1,319 |   |
| Accrued      Pension/SERP                       |   | 4,669  |   |   |   | 2,321 |   |
| Securities      Accretion                       |   | 25     |   |   |   | 25 |   |
| Market      Value on Loans Held for Sale        |   | 59     |   |   |   | 122 |   |
| Other                                           |   | 68     |   |   |   | 223 |   |
| Total      Deferred Tax Liabilities             |   | 13,730 |   |   |   | 10,994 |   |
| Net      Deferred Tax Assets                    | $      | 2,761  |   |   | $      | 4,027 |   |

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| (Dollars      in Thousands)                                                                         | 2007   |   |    | 2006   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Balance      at Beginning of Year                                                                   | $      | 4,027  |    |   | $      | 380 |   |
|                                                                                                |   |   |    |   |   |   |   |
| Change      in Accounting Method – Adoption of SFAS No. 158 and SAB No.      108              |   | -      |    |   |   | 5,463 |   |
|                                                                                                |   |   |    |   |   |   |   |
| Income      Tax Expense From Change in Pension Liability                                            |   | (830   | )       |   |   | - |   |
|                                                                                                |   |   |    |   |   |   |   |
| Income      Tax Expense From Change in Unrealized Losses on Available-for-Sale      Securities |   | (616   | )  |   |   | (202 | )  |
|                                                                                                |   |   |    |   |   |   |   |
| Deferred      Income Tax Expense on Continuing Operations                                           |   | 180    |    |   |   | (1,614 | ) |
|                                                                                                |   |   |    |   |   |   |   |
| Balance      at End of Year                                                                         | $      | 2,761  |    |   | $      | 4,027 |   |

| (Dollars      in Thousands)                                                   |   | 2007   |   |
|-------------------------------------------------------------------------------|--------|--------|--------|
| Balance      at January 1, 2007                                               |   | $      | 2,021  |   |
| Addition      Based on Tax Positions Related to Prior Years                   |   |   | 252    |   |
| Addition      Based on Tax Positions Related to      Current  Years |   |   | 981    |   |
| Balance      at December 31, 2007                                             |   | $      | 3,254  |   |

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| Options                               | Shares |   | Weighted-Average      Exercise Price |   | Weighted-Average      Remaining Contractual Term |   | Aggregate      Intrinsic Value |   |
|---------------------------------------|--------|--------|--------------------------------------|--------|--------------------------------------------------|--------|--------------------------------|--------|
| Outstanding      at January 1, 2007   |   | 60,384 |                                 | $      | 32.79                                            |   | $                              | 7.9    |   | $ | 151,355 |   |
| Granted                               |   | -      |                                 |   | -                                                |   |                           | -      |   |   | - |   |
| Exercised                             |   | -      |                                 |   | -                                                |   |                           | -      |   |   | - |   |
| Forfeited      or expired             |   | -      |                                 |   | -                                                |   |                           | -      |   |   | - |   |
| Outstanding      at December 31, 2007 |   | 60,384 |                                 | $      | 32.79                                            |   | $                              | 6.9    |   | $ | - |   |
| Exercisable      at December 31, 2007 |   | 47,720 |                                 | $      | 32.79                                            |   | $                              | 6.9    |   | $ | - |   |

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|                          |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Dividend      yield           |   |   | 2.1    | %      |   |   | 1.9    | %      |   |   | 1.9 | % |
| Expected      volatility      |   |   | 25.5   | %      |   |   | 23.5   | %      |   |   | 28.0 | % |
| Risk-free      interest rate  |   |   | 4.8    | %      |   |   | 4.5    | %      |   |   | 2.6 | % |
| Expected      life (in years) |   |   | 0.5    |   |   |   | 0.5    |   |   |   | 0.5 |   |

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Table of Contents

| (Dollars      in Thousands)                                                         | 2007     |   |   | 2006     |   |   | 2005     |   |
|-------------------------------------------------------------------------------------|----------|--------|--------|----------|--------|--------|----------|--------|
| Change      in Projected Benefit Obligation:                                        |     |   |   |     |   |   |     |   |
| Benefit      Obligation at Beginning of Year                                        | $        | 68,671 |   |     | $      | 64,131 |     |   | $ | 54,529 |   |
| Service      Cost                                                                   |     | 4,903  |   |     |   | 4,930  |     |   |   | 4,352 |   |
| Interest      Cost                                                                  |     | 3,967  |   |     |   | 3,622  |     |   |   | 3,253 |   |
| Actuarial      (Gain)/Loss                                                          |     | (1,420 | )      |     |   | (1,421 | )        |   |   | 2,752 |   |
| Benefits      Paid                                                                  |     | (5,759 | )      |     |   | (3,267 | )        |   |   | (3,501 | ) |
| Expenses      Paid                                                                  |     | (244   | )      |     |   | (149   | )        |   |   | (75 | ) |
| Plan      Change                                                                    |     | -      |   |     |   | 825    |     |   |   | - |   |
| Acquisitions                                                                        |     | -      |   |     |   | -      |     |   |   | 2,821 |   |
| Projected      Benefit Obligation at End of Year                                    | $        | 70,118 |   |     | $      | 68,671 |     |   | $ | 64,131 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Accumulated      Benefit Obligation at End of Year                                  | $        | 51,256 |   |     | $      | 49,335 |     |   | $ | 45,645 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Change      in Plan Assets:                                                         |     |   |   |     |   |   |     |   |   |   |   |
| Fair      Value of Plan Assets at Beginning of Year                                 | $        | 66,554 |   |     | $      | 52,277 |     |   | $ | 41,125 |   |
| Actual      Return on Plan Assets                                                   |     | 3,602  |   |     |   | 6,342  |     |   |   | 1,737 |   |
| Employer      Contributions                                                         |     | 11,500 |   |     |   | 11,350 |     |   |   | 10,500 |   |
| Benefits      Paid                                                                  |     | (5,759 | )      |     |   | (3,267 | )        |   |   | (3,501 | ) |
| Expenses      Paid                                                                  |     | (244   | )      |     |   | (149   | )        |   |   | (75 | ) |
| Acquisitions                                                                        |     | -      |   |     |   | -      |     |   |   | 2,491 |   |
| Fair      Value of Plan Assets at End of Year                                       | $        | 75,653 |   |     | $      | 66,553 |     |   | $ | 52,277 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Reconciliation      of Funded Status:                                               |     |   |   |     |   |   |     |   |   |   |   |
| Funded      Status                                                                  | $        |   | *      |     | $      |   | *        |   | $ | (11,853 | ) |
| Unrecognized      Net Actuarial Losses                                              |     | *      |   |     |   | *      |     |   |   | 14,823 |   |
| Unrecognized      Prior Service Cost                                                |     | *      |   |     |   | *      |     |   |   | 1,302 |   |
| Prepaid      (Accrued) Benefit Cost                                                 | $        |   | *      |     | $      |   | *        |   | $ | 4,272 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Amounts      Recognized in the Consolidated Statements of Financial      Condition: |     |   |   |     |   |   |     |   |   |   |   |
| Other      Assets                                                                   | $        | 5,535  |   |     | $      | -      |     |   | $ |   | * |
| Other      Liabilities                                                              |     | -      |   |     |   | 2,117  |     |   |   | * |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Amounts      (Pre-Tax) Recognized in Accumulated Other Comprehensive      Income:   |     |   |   |     |   |   |     |   |   |   |   |
| Net      Actuarial Losses                                                           | $        | 8,622  |   |     | $      | 9,601  |     |   | $ |   | * |
| Prior      Service Cost                                                             |     | 1,611  |   |     |   | 1,912  |     |   |   | * |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| *Not Applicable due to adoption      of SFAS No. 158      effective 12/31/2006      |     |   |   |     |   |   |     |   |   |   |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Components      of Net Periodic Benefit Costs:                                      |     |   |   |     |   |   |     |   |   |   |   |
| Service      Cost                                                                   | $        | 4,903  |   |     | $      | 4,930  |     |   | $ | 4,352 |   |
| Interest      Cost                                                                  |     | 3,967  |   |     |   | 3,622  |     |   |   | 3,410 |   |
| Expected      Return on Plan Assets                                                 |     | (5,083 | )      |     |   | (4,046 | )        |   |   | (3,373 | ) |
| Amortization      of Prior Service Costs                                            |     | 301    |   |     |   | 215    |     |   |   | 215 |   |
| Transition      Obligation Recognition                                              |     | -      |   |     |   | -      |     |   |   | 11 |   |
| Recognized      Net Actuarial Loss                                                  |     | 1,039  |   |     |   | 1,598  |     |   |   | 1,324 |   |
| Net      Periodic Benefit Cost                                                      | $        | 5,127  |   |     | $      | 6,319  |     |   | $ | 5,939 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Assumptions:                                                                        |     |   |   |     |   |   |     |   |   |   |   |
| Weighted-average      used to determine benefit obligations:                        |     |   |   |     |   |   |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.25   | %      |     |   | 6.00   | %        |   |   | 5.75 | % |
| Expected      Return on Plan Assets                                                 |     | 8.00   | %      |     |   | 8.00   | %        |   |   | 8.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50   | %      |     |   | 5.50   | %        |   |   | 5.50 | % |
| Measurement      Date                                                               | 12/31/07 |   |   | 12/31/06 |   |   | 12/31/05 |   |
|                                                                                |     |   |   |     |   |   |     |   |   |   |   |
| Weighted-average      used to determine net cost:                                   |     |   |   |     |   |   |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.00   | %      |     |   | 5.75   | %        |   |   | 6.00 | % |
| Expected      Return on Plan Assets                                                 |     | 8.00   | %      |     |   | 8.00   | %        |   |   | 8.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50   | %      |     |   | 5.50   | %        |   |   | 5.50 | % |

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| Actuarial      Loss     |   | $      | 890   |   |
|-------------------------|--------|--------|-------|--------|
| Prior      Service Cost |   |   | 301   |   |
|                    |   | $      | 1,191 |   |

|                   | Target      Allocation |   |   | Percentage      of PlanAssets      at Year-End(1) |   |
|------------------------|------------------------|--------|--------|---------------------------------------------------|--------|
|                   | 2008                   |   |   | 2007                                              |   |   | 2006 |   |
| Equity      Securities |                   | 65     | %      |                                              |   | 58 | % |   |   | 55 | % |
| Debt      Securities   |                   | 30     | %      |                                              |   | 27 | % |   |   | 18 | % |
| Real      Estate       |                   | -      |   |                                              |   | - |   |   |   | 1 | % |
| Cash      Equivalent   |                   | 5      | %      |                                              |   | 15 | % |   |   | 26 | % |
| Total                  |                   | 100    | %      |                                              |   | 100 | % |   |   | 100 | % |

| (1) | Represents asset allocation at      year-end which may differ from the average target allocation for the year      due to the year-end cash contribution to the  plan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2008                   |   | $      | 3,803,091  |   |
|------------------------|--------|--------|------------|--------|
| 2009                   |   |   | 3,776,819  |   |
| 2010                   |   |   | 3,715,534  |   |
| 2011                   |   |   | 4,563,901  |   |
| 2012                   |   |   | 5,547,476  |   |
| 2013      through 2017 |   |   | 36,465,818 |   |
|                   |   | $      | 57,872,639 |   |

|                      | 2007              |   | 2006              |   | Expected2008(1)   |
|---------------------------|-------------------|--------|-------------------|--------|-------------------|
| Actual      Contributions | $      11,500,000 |   | $      11,350,000 |   | $      10,000,000 |

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Table of Contents

| (Dollars      in Thousands)                                                         | 2007     |    |   | 2006     |   |    | 2005     |   |
|-------------------------------------------------------------------------------------|----------|---------|--------|----------|--------|---------|----------|--------|
| Change      in Projected Benefit Obligation:                                        |     |    |   |     |   |    |     |   |
| Benefit      Obligation at Beginning of Year                                        | $        | 4,018   |   |     | $      | 3,878   |     |   | $ | 3,601 |   |
| Service      Cost                                                                   |     | 83      |   |     |   | 123     |     |   |   | 133 |   |
| Interest      Cost                                                                  |     | 208     |   |     |   | 230     |     |   |   | 207 |   |
| Actuarial      (Gain) Loss                                                          |     | (603    | )      |     |   | 62      |     |   |   | (63 | ) |
| Plan      Change                                                                    |     | -       |   |     |   | (274    | )   |   |   | - |   |
| Projected      Benefit Obligation at End of Year                                    | $        | 3,706   |   |     | $      | 4,019   |     |   | $ | 3,878 |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Accumulated      Benefit Obligation at End of Year                                  | $        | 2,603   |   |     | $      | 2,252   |     |   | $ | 2,295 |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Reconciliation      of Funded Status:                                               |     |    |   |     |   |    |     |   |   |   |   |
| Unfunded      Status                                                                | $        |  * |   |     | $      |  * |     |   | $ | (3,878 | ) |
| Unrecognized      Net Actuarial Loss                                                |     | *       |   |     |   | *       |     |   |   | 734 |   |
| Unrecognized      Prior Service Cost                                                |     | *       |   |     |   | *       |     |   |   | 388 |   |
| Accrued      Benefit Cost                                                           |     |  * |   |     |   |  * |     |   | $ | (2,756 | ) |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Amounts      Recognized in the Consolidated Statements of Financial      Condition: |     |    |   |     |   |    |     |   |   |   |   |
| Other      Liabilities                                                              | $        | 3,706   |   |     | $      | 4,019   |     |   | $ |   | * |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Amounts      (Pre-Tax) Recognized in Accumulated Other Comprehensive      Income:   |     |    |   |     |   |    |     |   |   |   |   |
| Net      Actuarial (Gain) Loss                                                      | $        | 3       |   |     | $      | 608     |     |   | $ |   | * |
| Prior      Service Cost                                                             |     | 44      |   |     |   | 52      |     |   |   | * |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| *      Not Applicable due to adoption of SFAS No. 158 effective      12/31/2006     |     |    |   |     |   |    |     |   |   |   |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Components      of Net Periodic Benefit Costs:                                      |     |    |   |     |   |    |     |   |   |   |   |
| Service      Cost                                                                   | $        | 83      |   |     | $      | 123     |     |   | $ | 133 |   |
| Interest      Cost                                                                  |     | 208     |   |     |   | 230     |     |   |   | 207 |   |
| Amortization      of Prior Service Cost                                             |     | 7       |   |     |   | 61      |     |   |   | 61 |   |
| Recognized      Net Actuarial Loss                                                  |     | 8       |   |     |   | 100     |     |   |   | 77 |   |
| Net      Periodic Benefit Cost                                                      | $        | 306     |   |     | $      | 514     |     |   | $ | 478 |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Assumptions:                                                                        |     |    |   |     |   |    |     |   |   |   |   |
| Weighted-average      used to determine the benefit obligations:                    |     |    |   |     |   |    |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.25    | %      |     |   | 6.00    | %        |   |   | 5.75 | % |
| Rate      of Compensation Increase                                                  |     | 5.50    | %      |     |   | 5.50    | %        |   |   | 5.50 | % |
| Measurement      Date                                                               | 12/31/07 |    |   | 12/31/06 |   |    | 12/31/05 |   |
|                                                                                |     |    |   |     |   |    |     |   |   |   |   |
| Weighted-average      used to determine the net cost:                               |     |    |   |     |   |    |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.00    | %      |     |   | 5.75    | %        |   |   | 6.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50    | %      |     |   | 5.50    | %        |   |   | 5.50 | % |

----

Table of Contents

| 2008                   |   | $      | 87,468    |   |
|------------------------|--------|--------|-----------|--------|
| 2009                   |   |   | 187,469   |   |
| 2010                   |   |   | 230,238   |   |
| 2011                   |   |   | 300,865   |   |
| 2012                   |   |   | 366,840   |   |
| 2013      through 2017 |   |   | 2,950,973 |   |
|                   |   | $      | 4,123,853 |   |

| (Dollars      in Thousands, Except Per Share Data)                                                            | 2007   |       |   | 2006   |   |       | 2005   |   |
|---------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|--------|------------|--------|--------|
| Numerator:                                                                                                    |   |       |   |   |   |       |   |   |
| Net      Income                                                                                               | $      | 29,683     |   |   | $      | 33,265     |   |   | $ | 30,281 |   |
|                                                                                                          |   |       |   |   |   |       |   |   |   |   |   |
| Denominator:                                                                                                  |   |       |   |   |   |       |   |   |   |   |   |
| Denominator      for Basic Earnings Per Share Weighted-Average Shares                                         |   | 17,909,396 |   |   |   | 18,584,519 |   |   |   | 18,263,855 |   |
| Effects      of Dilutive Securities Stock Compensation Plans                                                  |   | 2,191      |   |   |   | 25,320     |   |   |   | 17,388 |   |
|                                                                                                          |   |       |   |   |   |       |   |   |   |   |   |
| Denominator      for Diluted Earnings Per Share Adjusted Weighted-Average Shares and      Assumed Conversions |   | 17,911,587 |   |   |   | 18,609,839 |   |   |   | 18,281,243 |   |
|                                                                                                          |   |       |   |   |   |       |   |   |   |   |   |
| Basic      Earnings Per Share                                                                                 | $      | 1.66       |   |   | $      | 1.79       |   |   | $ | 1.66 |   |
|                                                                                                          |   |       |   |   |   |       |   |   |   |   |   |
| Diluted      Earnings per Share                                                                               | $      | 1.66       |   |   | $      | 1.79       |   |   | $ | 1.66 |   |

----

Table of Contents

|                        |   | Actual |                                  | RequiredFor      CapitalAdequacy      Purposes |   | To      Be Well-Capitalized      UnderPrompt      CorrectiveAction      Provisions |   |
|-----------------------------|--------|--------|---------------------------------------|------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|
| (Dollars in Thousands) |   | Amount |                                  | Ratio                                          |   | Amount                                                                             |   | Ratio |   | Amount |   | Ratio |   |
| As of December 31, 2007:    |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Tier      I Capital:        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                        |   | $      |  261,172                         |                                           |   | 13.05                                                                              | %      | $ | 80,047 |   |   | 4.00 | % |   | * |   |   | * |   |
| CCB                         |   |   |     260,720       |                                           |   | 13.05                                                                              | %      |   | 79,934 |   |   | 4.00 | % |   | 119,901 |   |   | 6.00 | % |
|                        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Capital:         |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CCBG                        |   |   |      281,125 |                                           |   | 14.05                                                                              | %      |   | 160,094 |   |   | 8.00 | % |   | * |   |   | * |   |
| CCB                         |   |   |      278,787 |                                           |   | 13.95                                                                              | %      |   | 159,868 |   |   | 8.00 | % |   | 199,835 |   |   | 10.00 | % |
|                        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Leverage:       |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CCBG                        |   |   |      261,172 |                                           |   | 10.41                                                                              | %      |   | 80,047 |   |   | 4.00 | % |   | * |   |   | * |   |
| CCB                         |   |   |      260,720 |                                           |   | 10.42                                                                              | %      |   | 79,934 |   |   | 4.00 | % |   | 99,917 |   |   | 5.00 | % |
|                        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As of December 31,    2006: |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital:        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CCBG                        |   | $      | 280,679                               |                                           |   | 14.00                                                                              | %      | $ | 80,191 |   |   | 4.00 | % |   | * |   |   | * |   |
| CCB                         |   |   | 273,425                               |                                           |   | 13.66                                                                              | %      |   | 80,055 |   |   | 4.00 | % |   | 120,082 |   |   | 6.00 | % |
|                        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Capital:         |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CCBG                        |   |   | 299,783                               |                                           |   | 14.95                                                                              | %      |   | 160,382 |   |   | 8.00 | % |   | * |   |   | * |   |
| CCB                         |   |   | 290,642                               |                                           |   | 14.52                                                                              | %      |   | 160,109 |   |   | 8.00 | % |   | 200,137 |   |   | 10.00 | % |
|                        |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Leverage:       |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CCBG                        |   |   | 280,679                               |                                           |   | 11.30                                                                              | %      |   | 80,191 |   |   | 4.00 | % |   | * |   |   | * |   |
| CCB                         |   |   | 273,425                               |                                           |   | 11.03                                                                              | %      |   | 80,055 |   |   | 4.00 | % |   | 100,068 |   |   | 5.00 | % |

----

Table of Contents

| (Dollars      in Thousands)      |   | 2007   |   | 2006      |   | 2005   |   |
|----------------------------------|--------|--------|--------|-----------|--------|--------|--------|
| Noninterest      Income:         |   |   |   |      |   |   |   |
| Merchant      Fee Income         |   | $      | 7,257  |      | $      | 6,978  |   | $ | 6,174 |   |
| Interchange      Commission Fees |   |   | 3,757  |      |   | 3,105  |   |   | 2,239 |   |
| ATM/Debit      Card Fees         |   |   | 2,692  |      |   | 2,519  |   |   | 2,206 | (1)  |
| Noninterest      Expense:        |   |   |   |      |   |   |   |   |   |   |
| Professional      Fees           |   |   | 3,855  |      |   | 3,402  |   |   | 3,825 |   |
| Interchange      Service Fees    |   |   | 6,118  |      |   | 6,010  |   |   | 5,402 |   |
| Telephone                        |   |   | 2,373  |      |   | 2,323  |   |   | 2,493 |   |
| Advertising                      |   |   | 3,742  |      |   | 4,285  |   |   | 4,275 |   |
| Printing      & Supplies     |   |   | 2,124  | (1)  |   | 2,472  |   |   | 2,372 |   |

| (1) | <1% of appropriate      threshold. |
|-----|---------------------------------------|

----

Table of Contents

| (Dollars      in Thousands)          | Amount |    |
|--------------------------------------|--------|---------|
| Commitments      to Extend Credit(1) | $      | 437,806 |   |
| Standby      Letters of Credit       | $      | 17,385  |   |

| (1) | Commitments include unfunded      loans, revolving lines of credit, and other unused      commitments. |
|-----|--------------------------------------------------------------------------------------------------------|

----

Table of Contents

|                                         | At      December 31, |      |
|----------------------------------------------|----------------------|-----------|
|                                         | 2007                 |      |   | 2006 |   |
| (Dollars      in Thousands)                  | CarryingValue        |      |   | EstimatedFairValue |   |   | CarryingValue |   |   | EstimatedFairValue |   |
| Financial      Assets:                       |                 |      |   |   |   |   |   |   |   |   |   |
| Cash                                         | $                    | 93,437    |   |   | $ | 93,437 |   |   | $ | 98,769 |   |   | $ | 98,769 |   |
| Short-Term      Investments                  |                 | 166,260   |   |   |   | 166,260 |   |   |   | 78,795 |   |   |   | 78,795 |   |
| Investment      Securities                   |                 | 190,719   |   |   |   | 190,719 |   |   |   | 191,894 |   |   |   | 191,894 |   |
| Loans,      Net of Allowance for Loan Losses |                 | 1,897,784 |   |   |   | 1,982,661 |   |   |   | 1,982,504 |   |   |   | 1,992,025 |   |
| Total      Financial Assets                  | $                    | 2,348,200 |   |   | $ | 2,433,077 |   |   | $ | 2,351,962 |   |   | $ | 2,361,483 |   |
|                                         |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Liabilities:                  |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                     | $                    | 2,142,344 |   |   | $ | 2,089,550 |   |   | $ | 2,081,654 |   |   | $ | 2,007,308 |   |
| Short-Term      Borrowings                   |                 | 53,131    |   |   |   | 53,022 |   |   |   | 65,023 |   |   |   | 64,970 |   |
| Subordinated      Notes Payable              |                 | 62,887    |   |   |   | 63,371 |   |   |   | 62,887 |   |   |   | 63,013 |   |
| Long-Term      Borrowings                    |                 | 26,731    |   |   |   | 28,284 |   |   |   | 43,083 |   |   |   | 42,256 |   |
| Total      Financial Liabilities             | $                    | 2,285,093 |   |   | $ | 2,234,227 |   |   | $ | 2,252,647 |   |   | $ | 2,177,547 |   |

----

Table of Contents

| (Dollars      in Thousands)                                                                  | 2007   |    |    | 2006   |   |   | 2005   |   |
|----------------------------------------------------------------------------------------------|--------|---------|---------|--------|--------|--------|--------|--------|
| OPERATING      INCOME                                                                        |   |    |    |   |   |   |   |   |
| Income      Received from Subsidiary Bank:                                                   |   |    |    |   |   |   |   |   |
| Dividends                                                                                    | $      | 49,207  |    |   | $      | 20,166 |   |   | $ | 10,597 |   |
| Overhead      Fees                                                                           |   | 3,532   |    |   |   | 3,524  |   |   |   | 2,716 |   |
| Other      Income                                                                            |   | 164     |    |   |   | 112    |   |   |   | 87 |   |
| Total      Operating Income                                                                  |   | 52,903  |    |   |   | 23,802 |   |   |   | 13,400 |   |
|                                                                                         |   |    |    |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSE                                                                       |   |    |    |   |   |   |   |   |   |   |   |
| Salaries      and Associate Benefits                                                         |   | 1,812   |    |   |   | 2,360  |   |   |   | 2,191 |   |
| Interest      on Subordinated Notes Payable                                                  |   | 3,730   |    |   |   | 3,725  |   |   |   | 2,981 |   |
| Professional      Fees                                                                       |   | 787     |    |   |   | 741    |   |   |   | 1,399 |   |
| Advertising                                                                                  |   | 260     |    |   |   | 403    |   |   |   | 467 |   |
| Legal      Fees                                                                              |   | 375     |    |   |   | 604    |   |   |   | 701 |   |
| Other                                                                                        |   | 621     |    |   |   | 649    |   |   |   | 471 |   |
| Total      Operating Expense                                                                 |   | 7,585   |    |   |   | 8,482  |   |   |   | 8,210 |   |
| Income      Before Income Taxes and Equity in Undistributed Earnings of Subsidiary      Bank |   | 45,318  |    |   |   | 15,320 |   |   |   | 5,190 |   |
| Income      Tax Benefit                                                                      |   | (1,429  | )       |   |   | (1,835 | )      |   |   | (2,060 | ) |
| Income      Before Equity in Undistributed Earnings of Subsidiary      Bank                  |   | 46,747  |    |   |   | 17,155 |   |   |   | 7,250 |   |
| Equity      in Undistributed Earnings of Subsidiary Bank                                     |   | (17,064 | )  |   |   | 16,110 |   |   |   | 23,031 |   |
| Net      Income                                                                              | $      | 29,683  |    |   | $      | 33,265 |   |   | $ | 30,281 |   |

| (Dollars in Thousands, Except      Per Share Data)(1)                                                                                                                                            | 2007   |    |   | 2006   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|
| ASSETS                                                                                                                                                                                           |   |    |   |   |   |
| Cash      and Due From Subsidiary Bank                                                                                                                                                           | $      | 958     |   |   | $      | 8,921 |   |
| Investment      in Subsidiary Bank                                                                                                                                                               |   | 357,093 |   |   |   | 373,278 |   |
| Other      Assets                                                                                                                                                                                |   | 2,826   |   |   |   | 1,550 |   |
| Total      Assets                                                                                                                                                                                | $      | 360,877 |   |   | $      | 383,749 |   |
|                                                                                                                                                                                             |   |    |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                      |   |    |   |   |   |   |   |
| Subordinated      Notes Payable                                                                                                                                                                  | $      | 62,887  |   |   | $      | 62,887 |   |
| Other      Liabilities                                                                                                                                                                           |   | 5,315   |   |   |   | 5,092 |   |
| Total      Liabilities                                                                                                                                                                           | $      | 68,202  |   |   | $      | 67,979 |   |
|                                                                                                                                                                                             |   |    |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                                                                                                                                                                         |   |    |   |   |   |   |   |
| Preferred      Stock, $.01 par value, 3,000,000 shares authorized; no shares issued and      outstanding                                                                                         |   | -       |   |   |   | - |   |
| Common      Stock, $.01 par value; 90,000,000 shares authorized; 17,182,553 and      18,518,398 shares issued and outstanding at December 31, 2007 and      December 31, 2006, respectively |   | 172     |   |   |   | 185 |   |
| Additional      Paid-In Capital                                                                                                                                                                  |   | 38,243  |   |   |   | 80,654 |   |
| Retained      Earnings                                                                                                                                                                           |   | 260,325 |   |   |   | 243,242 |   |
| Accumulated      Other Comprehensive Loss, Net of Tax                                                                                                                                            |   | (6,065  | )      |   |   | (8,311 | ) |
| Total      Shareowners' Equity                                                                                                                                                                   |   | 292,675 |   |   |   | 315,770 |   |
| Total      Liabilities and Shareowners' Equity                                                                                                                                                   | $      | 360,877 |   |   | $      | 383,749 |   |

| (1) | All share and per share data have      been adjusted to reflect the 5-for-4 stock split effective July 1,      2005. |
|-----|----------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| (Dollars in Thousands)                                                                      | 2007   |    |   | 2006   |   |    | 2005    |   |
|---------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|---------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                  |   |    |   |   |   |    |    |   |
| Net      Income                                                                             | $      | 29,683  |   |   | $      | 33,265  |    |   | $ | 30,281 |   |
| Adjustments      to Reconcile Net Income to Net Cash Provided by Operating      Activities: |   |    |   |   |   |    |    |   |   |   |   |
| Equity      in Undistributed Earnings of Subsidiary Bank                                    |   | 17,064  |   |   |   | (16,110 | )       |   |   | (23,031 | ) |
| Non-Cash      Compensation                                                                  |   | 238     |   |   |   | 1,673   |    |   |   | 110 |   |
| Increase      in Other Assets                                                               |   | (152    | )      |   |   | (670    | )  |   |   | 131 |   |
| Increase      in Other Liabilities                                                          |   | 222     |   |   |   | 1,976   |    |   |   | 381 |   |
| Net      Cash Provided by Operating Activities                                              |   | 47,055  |   |   |   | 20,134  |    |   |   | 7,872 |   |
|                                                                                        |   |    |   |   |   |    |    |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                  |   |    |   |   |   |    |    |   |   |   |   |
| Cash      Paid for Investment in:                                                           |   |    |   |   |   |    |    |   |   |   |   |
| Purchase      of held-to-maturity and available-for-salesecurities                          |   | (1,000  | )      |   |   | -       |    |   |   | - |   |
| CCBG      Capital Trust I and CCBG Capital Trust II                                         |   | -       |   |   |   | -       |    |   |   | (959 | ) |
| Cash      Paid for Acquisitions                                                             |   | -       |   |   |   | -       |    |   |   | (29,953 | ) |
| Increase      in Investment in Bank Subsidiary                                              |   | 1,466   |   |   |   | -       |    |   |   | - |   |
| Net      Cash Used in Investing Activities                                                  |   | 466     |   |   |   | -       |    |   |   | (30,912 | ) |
|                                                                                        |   |    |   |   |   |    |    |   |   |   |   |
| CASH      FROM FINANCING ACTIVITIES:                                                        |   |    |   |   |   |    |    |   |   |   |   |
| Proceeds      from Subordinated Notes                                                       |   | -       |   |   |   | -       |    |   |   | 31,959 |   |
| Payment      of Dividends                                                                   |   | (12,823 | )      |   |   | (12,322 | )       |   |   | (11,397 | ) |
| Repurchase      of Common Stock                                                             |   | (43.233 | )      |   |   | (5,360  | )       |   |   | - |   |
| Issuance      of Common Stock                                                               |   | 572     |   |   |   | 1,035   |    |   |   | 1,019 |   |
| Net      Cash (Used in) Provided by Financing Activities                                    |   | (55,484 | )      |   |   | (16,647 | )  |   |   | 21,581 |   |
|                                                                                        |   |    |   |   |   |    |    |   |   |   |   |
| Net      Increase (Decrease) in Cash                                                        |   | (7,963  | )      |   |   | 3,487   |    |   |   | (1,459 | ) |
| Cash      at Beginning of Period                                                            |   | 8,921   |   |   |   | 5,434   |    |   |   | 6,893 |   |
| Cash      at End of Period                                                                  | $      | 958     |   |   | $      | 8,921   |    |   | $ | 5,434 |   |

|  (Dollars in      Thousands)                                                                                                                                                    |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Other      Comprehensive Income (Loss):                                                                                                                                              |   |   |   |   |   |   |   |   |   |
|             Securities available for sale:                                                                                                             |   |   |   |   |   |   |   |   |   |
|              Change      in net unrealized gain (loss), net of tax expense (benefit) of $616, $202,      and $(502) |   | $      | 1,080  |   |   | $      | 412    |   |   | $ | (893 | ) |
|             Retirement plans:                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in funded status of defined benefit pension plan and SERP plan, net of tax      expense of $830                                                                          |   |   | 1,166  |   |   |   | -      |   |   |   | - |   |
|  Net      Other Comprehensive Gain (Loss)                                                                                                                                       |   | $      | 2,246  |   |   | $      | 412    |   |   | $ | (893 | ) |
|                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| The      components of accumulated other comprehensive income, net of tax, as of      year-end were as follows:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|             Net unrealized gain (loss) on securities available forsale                                                                                 |   | $      | 246    |   |   | $      | (834   | )      |   | $ | (1,246 | ) |
|             Net unfunded liability for defined benefit pension plan and SERP      plan                                                                 |   |   | (6,311 | )      |   |   | (7,477 | )      |   |   | - |   |
|                                                                                                                                                                                 |   | $      | (6,065 | )      |   | $      | (8,311 | )      |   | $ | (1,246 | ) |

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| Item  9. | Changes in and Disagreements with      Accountants on Accounting and Financial  Disclosure |
|--------------------|--------------------------------------------------------------------------------------------|

| Item      9A. | Controls and      Procedures |
|---------------|------------------------------|

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| Item      9B. | Other      Information |
|---------------|------------------------|

| Item      10. | Directors, Executive Officers,      and Corporate Governance |
|---------------|--------------------------------------------------------------|

| Item      11. | Executive      Compensation |
|---------------|-----------------------------|

| Item      12. | Security Ownership of Certain      Beneficial Owners and Management and Related Shareowners      Matters |
|---------------|----------------------------------------------------------------------------------------------------------|

| Plan      Category                                               |   | Number      of securities to be issued upon exercise ofoutstanding      options, warrants and rights |   | Weighted-average      exercise priceof      outstanding options, warrants and rights |   | Number      of securities remaining availablefor      future issuance under equitycompensation      plans (excludingsecurities      reflected in column (a)) |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |   | (a)                                                                                                  |   | (b)                                                                                  |   | (c)                                                                                                                                                          |
| Equity      Compensation Plans Approved by Securities Holders    |   | 60,384(1)                                                                                            |   | $32.83                                                                               |   |                      1,410,930(2)                                                      |
|                                                             |   |                                                                                                 |   |                                                                                 |   |                                                                                                                                                         |
| Equity      Compensation Plans Not Approved by SecuritiesHolders |   | -                                                                                                    |   | -                                                                                    |   |  -                                                                                                                                                      |
| Total                                                            |   | 60,384                                                                                               |   | $      32.83                                                                         |   |                   1,410,930                                                                      |

| (1) | Includes 60,384 shares that may      be issued upon exercise of outstanding options under the terminated 1996      Associate Incentive Plan. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists of 814,108 shares available for issuance      under our 2005 Associate Incentive Plan, 533,938 shares available for issuance      under our 2005 Associate Stock Purchase Plan, and 62,884 shares available for issuance      under our 2005 Director Stock Purchase Plan. Of these plans, the only plan      under which options may be granted in the future is our 2005 Associate      Incentive Plan. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item      13. | Certain Relationships and Related Transactions, and      Director Independence |
|---------------|--------------------------------------------------------------------------------|

| Item      14. | Principal Accountant Fees and      Services |
|---------------|---------------------------------------------|

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PART IV

|   | The      following documents are filed as part of this  report |
|--------|----------------------------------------------------------------|

|   | 2.1 | Agreement      and Plan of Merger, dated as of February 3, 2005, by and among Capital      City Bank Group, Inc., First Alachua Banking Corporation, and First      National Bank of Alachua (the schedules and exhibits have been omitted      pursuant to Item 601(b)(2) of Regulation S-K) - incorporated herein by      reference to the Registrant’s Form 8-K (filed 2/9/05) (No.      0-13358). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1 | Amended      and Restated Articles of Incorporation - incorporated herein by reference      to Exhibit 3 of the Registrant’s 1996 Proxy Statement (filed 4/11/96) (No.      0-13358). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Amended      and Restated Bylaws - incorporated herein by reference to Exhibit 3.2 of      the Registrant’s Form 8-K (filed 11/30/07) (No.  0-13358). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | See      Exhibits 3.1, and 3.2 for provisions of Amended and Restated Articles of      Incorporation and Amended and Restated Bylaws, which define the rights of      its shareowners. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | Capital      City Bank Group, Inc. 2005 Director Stock Purchase Plan - incorporated      herein by reference to Exhibit 4.3 of the Registrant’s Form S-8      (filed 11/5/04) (No. 333-120242). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | Capital      City Bank Group, Inc. 2005 Associate Stock Purchase Plan - incorporated      herein by reference to Exhibit 4.4 of the Registrant’s Form S-8      (filed 11/5/04) (No. 333-120242). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | Capital      City Bank Group, Inc. 2005 Associate Incentive Plan - incorporated herein      by reference to Exhibit 4.5 of the Registrant’s Form S-8 (filed      11/5/04) (No. 333-120242). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.5 | In      accordance with Regulation S-K, Item 601(b)(4)(iii)(A) certain      instruments defining the rights of holders of long-term debt of Capital      City Bank Group, Inc. not exceeding 10% of the total assets of Capital      City Bank Group, Inc. and its consolidated subsidiaries have been omitted;      the Registrant agrees to furnish a copy of any such instruments to the      Commission upon request. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Capital      City Bank Group, Inc. 1996 Dividend Reinvestment and Optional Stock      Purchase Plan - incorporated herein by reference to Exhibit 10 of the      Registrant’s Form S-3 (filed 01/30/97) (No.  333-20683). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Capital      City Bank Group, Inc. Supplemental Executive Retirement Plan -      incorporated herein by reference to Exhibit 10(d) of the Registrant’s Form      10-K (filed 3/27/03) (No. 0-13358). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | Capital      City Bank Group, Inc. 401(k) Profit Sharing Plan – incorporated herein by      reference to Exhibit 4.3 of Registrant’s Form S-8 (filed 09/30/97) (No.      333-36693). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 10.4 | 2005      Stock Option Agreement by and between Capital City Bank Group, Inc. and      William G. Smith, Jr., dated March 24, 2005 – incorporated herein by      reference to Exhibit 10.1 of the Registrant’s Form 8-K (filed 3/31/05)      (No. 0-13358). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | 2006      Stock Option Agreement by and between Capital City Bank Group, Inc. and      William G. Smith, Jr., dated March 23, 2006 – incorporated herein by      reference to Exhibit 10.1 of the Registrant’s Form 8-K (filed 3/29/06)      (No. 0-13358). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Capital      City Bank Group, Inc. Non-Employee Director Plan, as amended –      incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form      8-K (filed 3/29/06) (No. 0-13358). |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Form      of Participant Agreement for the Capital City Bank Group, Inc. Long-Term      Incentive Plan – incorporated herein by reference to Exhibit 10.1 of the      Registrant’s Form 10-Q (filed 8/10/06) (No.  0-13358). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11 | Statement      re Computation of Per ShareEarnings.* |
|--------|----|------------------------------------------------------|

|   | 14 | Capital      City Bank Group, Inc. Code of Ethics for the Chief Financial Officer and      Senior Financial Officers - incorporated herein by reference to Exhibit 14      of the Registrant’s Form 8-K (filed 3/11/05) (No.  0-13358). |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21 | Capital City Bank Group, Inc. Subsidiaries, as of      December 31, 2007.** |
|--------|----|-----------------------------------------------------------------------------|

|   | 23.1 | Consent of Ernst & Young LLP, Independent      Registered Public AccountingFirm.** |
|--------|------|----------------------------------------------------------------------------------------|

|   | 23.2 | Consent of KPMG LLP, Independent Registered Public      Accounting Firm.** |
|--------|------|----------------------------------------------------------------------------|

|   | 31.1 | Certification of CEO pursuant to Securities and      Exchange Act Section 302 of the Sarbanes-Oxley Act of      2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification of CFO pursuant to Securities and      Exchange Act Section 302 of the Sarbanes-Oxley Act of      2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Certification of CEO pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.** |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification of CFO pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.** |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

| *  | Information      required to be presented in Exhibit 11 is provided in Note 13 to the      consolidated financial statements under Part II, Item 8 of this Form 10-K      in accordance with the provisions of FASB Statement of Financial      Accounting Standards (SFAS) No. 128, Earnings Per      Share. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** | Filed      electronically herewith.                                                                                                                                                                                                                                                                           |

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Signatures

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| Directors:                            |   |                                 |
|---------------------------------------|--------|--------------------------------------|
|                                  |   |                                 |
|  /s/      Dubose Ausley          |   |  /s/      L. McGrath Keen, Jr.  |
|  DuBose      Ausley              |   |  L.      McGrath Keen, Jr.      |
|                                  |   |                                 |
|  /s/      Thomas A. Barron       |   | /s/      Lina S. Knox                |
|  Thomas      A. Barron           |   |  Lina S.      Knox              |
|                                  |   |                                 |
|  /s/      Frederick Carroll, III |   |  /s/      Ruth A. Knox          |
|  Frederick      Carroll, III     |   |  Ruth A.      Knox              |
|                                  |   |                                 |
|  /s/      Cader B. Cox, III      |   |  /s/      Henry Lewis III       |
|  Cader      B. Cox, III          |   |  Henry      Lewis III           |
|                                  |   |                                 |
|  /s/      J. Everitt Drew        |   |  /s/      William G. Smith, Jr. |
|  J.      Everitt Drew            |   |  William      G. Smith, Jr.     |
|                                  |   |                                 |
|  /s/      John K. Humphress      |   |                                 |
| John      K. Humphress                |   |                                 |

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